Apple’s shares are hovering at around $98 a share this morning, well down from the 52 week high of $134.54. With so much positive news, record earnings on record sales, what is causing this drop?
Part of the drop is concern over the drop in the Chinese stock market, part of the concern is currency fluctuations (which make the iPhone more expensive in certain markets) and part of the concern has to do with inventory. From Nikkei Asian Review:
Apple is expected to reduce output of its latest iPhone models by around 30% in the January-March quarter compared with its original plans, according to several parts suppliers. The measure will deal a blow to Japanese and South Korean parts companies.
The U.S. company had initially told parts makers to keep production of the iPhone 6s and 6s Plus for the quarter at the same level as with their predecessors — the iPhone 6 and 6 Plus — a year earlier. But inventories of the two models launched last September have piled up at retailers in markets ranging from China and Japan to Europe and the U.S. amid lackluster sales. Customers saw little improvement in performance over the previous generation, while dollar appreciation led to sharp price hikes in emerging markets.
Output will be scaled back to let dealers go through their current stock. Production is expected to return to normal in the April-June quarter, once inventory adjustment is complete. Apple’s products and brand have not lost their appeal, and older models have continued to sell.
I’m certainly no expert at this sort of thing, but of all the articles I’ve read about Apple’s stock price drop (editorial pronouncements aside), this seems the closest to the heart of the matter.
It may not be all about Apple, the overall market for stocks may be contributing factor. Most stock indexes have been dropping due to various events over the past few weeks
But only Apple shares have been dropping since July 2015 and Apple did rather well nearly every quarter in 2015. Explain that. Apple had increased YoY iPhone sales and was profitable the entire year of 2015 and yet only Apple’s P/E compressed, so we’re not just talking about the events over the past few weeks. We’re talking about a news media attack of Apple while ignoring other companies that could be having the same problems as Apple. Every little thing that goes on with Apple is magnified and exaggerated by the news media and some of the reports could be outright lies if they’re not verified.
The news media is to blame for this? Are you Donald Trump? The stock market doesn’t care about what the media has to say they just care about making money. Look at the performance of tobacco company stocks, probably the most vilified industry in the world, over the past 20 years and tell me how media attacks on them has allowed them to outperform the S&P 500.
Its because the stock market is full of idiots.
Let’s see what they say on the 26th.
media definitely hold Apple to a different standard. you never hear about the other Foxconn brand customers, do you? just apple. or Samsung’s bendgate? gapgate? ad nauseum.
Expectations (and the backlash resulting from failing to meet those expectations) are based on past performance. Toyota gets more of a backlash for quality issues than Chrysler because Toyota has a higher quality benchmark.
Let me get this straight – Dave actually agrees that sales is lackluster in US, Europe, China and Japan?
Wasn’t there someone who said not to read into supply chain reports? Hmm…his name was something like Jim Took? Tim Look? I forget.
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There’s a fundamentall flaw in your view. It’s based on the premise that money is only to be made when stocks increase in value. Rapid transactions and short term shorting has a bigger influence now.
The way to make money on AAPL is to hold it long.
We will know for sure on Jan 26th, but the supply chain reports aren’t matching with usage metrics. 6s and 6s Plus are showing themselves in usage reports at about the same growth as the 6 and 6 Plus did, so someone is wrong.
Not sure that it will make a short term difference in the price of AAPL. Either you believe Apple is a very well run company that will continue to make great products or you don’t.
This shows a fundamental misunderstanding of the market and how Apple relates to it. Apple has too much volume for small groups to affect its price. And 60% of shares are owned by mutual funds and institutions (who aren’t going to be high velocity traders). Add to the fact that the Apple VIX is lower than the S&P 500 VIX indicates that it’s a pretty poor choice for momentum traders. And because Apple is a well tracked stock with relatively simple, well understood fundamentals, it’s harder to sneak something past.