Apple shares fail to outperform market this year

“Through three and a half months of market activity so far in 2018, Apple’s stock price situation is unusual,” Douglas A. McIntyre writes for 24/7 Wall St. “After being one of the top performing mega-cap stocks for years, it has only tracked the market.”

“Both Apple’s share price and the S&P 500 have risen about 1.5% this year. Apple has lacked a blockbuster product launch. Investors are worried the new iPhone 8 and iPhone X have lost sales momentum. Sales of the flagship iPhone X, in particular, have been disappointing, according to industry analysis.,” McIntyre writes. “A recent IDC research report on global PC sales showed Apple in fifth place based on sales in the first quarter. It sold 4 million ‘traditional’ PCs, and its market share dropped from 7.0% in the period last year to 6.6% in the most recent period.”

“Unless Apple has another huge product launch this year, there is nothing but better than expected earnings to press shares higher,” McIntyre writes. “Apple’s shares have not outperformed the market this year and may not in the near-term future.”

Read more in the full article here.

MacDailyNews Take: There is no proof that iPhone X sales are “disappointing.” None whatsoever. Just scattered reports (perhaps all based off one report) from a supplier or handful of suppliers that Apple has decreased certain component orders following the holiday quarter, as usual.

Even if a particular data point were factual it would be impossible to accurately interpret the data point as to what it meant for our overall business… There is just an inordinate[ly] long list of things that would make any single data point not a great proxy for what’s going on. Apple CEO Tim Cook, January 23, 2013

iPhone X was the best-selling smartphone in the world in the December quarter according to Canalys, and it has been our top selling phone every week since it launched. iPhone 8 and iPhone 8 Plus rounded out the top three iPhones in the quarter. In fact, revenue for our newly launched iPhones was the highest of any lineup in our history, driving total Apple revenue above our guidance range… The iPhone X was the most popular and that’s particularly noteworthy given that we didn’t start shipping until early November, and we’re constrained for a while. The team did a great job of getting into supply demand balance there in December. But since the launch of iPhone X, it has been the most popular iPhone every week, every week sales. And that is even through today, actually through January… We feel fantastic, particularly as it pertains to iPhone X. — Apple CEO Tim Cook, February 1, 2018<

Apple's job on the Mac under Cook is not great. At all. Apple's current CEO seems to have swallowed his company's marketing hook, line, and sinker that the iPad is the future of personal computing (which it actually is – eventually, not in its current state), so seems bound and determined to force the issue via the type of disinterest in the Mac that only a former Compaq parts-orderer could muster. In the hands of a more aggressive CEO, as opposed to just a caretaker CEO who’s proven repeatedly that he cannot take care of all of Apple’s product lines concurrently, the Macintosh would have much greater unit sales, market share, and profitability.

Apple CEO Tim Cook using his iPad on Monday, March 14, 2016 in his office at Apple headquarters in Cupertino, CA. (Photo: Michele Asselin for TIME)
Apple CEO Tim Cook using his iPad on Monday, March 14, 2016 in his office at Apple headquarters in Cupertino, CA. (Photo: Michele Asselin for TIME)

 
The company’s performance on the Mac or lack thereof aside, Apple has other catalysts beyond “better-than-expected earnings,” they have a looming a $245 billion repatriation and the subsequent company’s capital returns program update. That’s $245 billion with a “B.” That alone is more than enough to take the severely undervalued Apple Inc. to its rightful place as the world’s first true trillion-dollar company. Of course, they also have WWDC 2018 in June, new iPads, iPhones, and maybe even a Mac or two coming this year, among potentially other product and service announcements.

25 Comments

  1. The iPad is the NOT the sole single future of personal computing. That’s extremely dumb. I love my iPad as I used my love my tower Mac Pros which Apple no longer wants to make. The iPad is only part of the spectrum (computer, tablet, watch, phone) of the computer experience and will remain so for the foreseeable future. It’s like saying bikes and motorcycles will no longer be required because cars are here.

    1. Very much agreed. It can’t be a primary tool for education (supplemental, sure), either. They are really headed down the wrong road with that strategy IMO, and they insist on doubling down. The misguided desire in tech to constantly disrupt and reinvent the wheel has for years now created a palpable disconnect with what people actually want. Other companies have taken and run with true innovations of recent years (AirPlay, Apple TV, Siri, etc., things Apple did first) that Apple has squandered. I appreciate their stance on privacy more than I can say, and I loathe both Google and Windows, so I’m sticking around, but it’s been ugly.

    1. Tim Cook is an easy target for the ignoramus peanut gallery. Unfortunately every employee had major work and organizational disruption due to Steve Jobs Space Ship project, Apple will rebound big time.

  2. Education is a tricky one. It’s low cost low margin and that not an area that Apple likes to be in.
    It was different when schools bought iMacs. And in academia, the Mac is still be personal PC of choice.
    Chromebooks make a lot of sense for school. It’s all cloud based so content and apps can be better controls. Plus it has a keyboard.
    Apple could counter with an iOS laptop but would that cannablize the laptop market in a bad way.
    I was very disappointed in the 2019 Mac Pro delay. That makes no sense and sends the wrong message.
    I don’t worry too much about the stock. It was up 30% last year and needs to build some steam to push onto the 1T market cap.

    1. Education is much like a certain segment of the pro market. For what you’re expected to put into it, what you get out of it doesn’t always offset that expense.

  3. Stock Market 101: Wall Street doesn’t control, decide or “set” the price of a stock. Nor does it “reflect” the state of the economy, let alone the state of any company represented.
    For example, the success of Apple (or lack thereof) has no direct effect on the price of Apple’s stock. Rather, when traders are (in general) more interested in selling it than buying it, the price of a stock declines. The opposite is also true.
    If you “Play” the stock market (trade) you quickly discover the only way to make money on a rising stock is to be among the first to buy it (when it is still low). And the only way to avoid losing money on a declining stock is to be among the first to sell it (when it is still high). The net result, folks, is traders don’t watch the company behind the stock. They are watching each other. If a few start selling a stock, the rest rush to sell it, too. If they hear some news (or some analyst’s comments) that they think will cause other traders to react, they will try to be among the first to so react. Thus they become a self-fulfilling prophecy.
    Investors, on the other hand, are interested in the company. They buy and hold for the long term. For them, it’s a savings account with (hopefully) a better return. But because of this, Investors don’t influence price changes in any way.
    Wall Street is not smart, stupid or clueless. People who cry, “They just don’t understand Apple,” don’t understand the market. It’s a mob-mentality, pure & simple. They don’t care about you, me or Apple. They only care about each other and any “skill” they may have is simply the ability to predict what other traders might do before they do it.

    In other words, “traders” are like sheep… If a few suddenly start to run, they all run and in the same direction. Only afterward will analysts attempt to figure out why.
    What’s the solution for Apple? Minimize their reliance/exposure to traders. So, you begin share buy-backs and bond issues – with an eye toward reducing your risk (from traders) or perhaps one day eliminating it! (Get out of the stock market and go private. All they’d really need is lots of money to fund themselves! Hmmm.)
    I’ll get off my soap-box, now.

    1. And sell off the Mac side of the company to someone who understands the need for Mac computers and knows how to manage that new company. I will buy stock in that one.

  4. Tim Cook and Apple simply aren’t aggressive enough. They want to play everything conservatively and they don’t want to go head to head with any rivals. Why no major acquisitions when every other tech rival is using that tactic to grow revenue? Those are the sort of things that really excite investors. Stock buybacks are nice but boring as hell. I’m under the impression that once a company starts relying on stock buybacks, they’ve completely lost the will to move forward in terms of growth. Stock buybacks are more like a company coasting as far as big investors are concerned. Apple doesn’t seem to bring out the greed in big investors, so Amazon is always going to come out on top in terms of drawing in big investors happily willing to pay $1500 a share while ignoring Apple at $170 a share.

    I’m a long-term Apple investor and I’m doing OK. I’m only pointing out some of the reasons I think Apple is being ignored and many times spat upon. Apple needs to totally wreck a few rivals to get those big investors’ juices flowing but I don’t ever see that happening.

    I keep thinking that Apple has more than enough money to drop the hammer on rivals. I’d think Apple could put Netflix to shame but Netflix just keeps getting more value while Apple goes nowhere. No matter how much money Apple has, it always remains seen as a doomed company and a highly shorted stock. How can a company with all that money stay as a zero-growth company? Does that make any sense at all?

  5. I had AAPL stock during Jobs and Cooke. Please spare me the notion that Cooke is riding Jobs coattails. I’ve made a lot more money under Cooke. iPad is not the future for Apple. iPhone is and will only change when Apple disrupts another industry, like Energy. Do you really think the most iterative ecosystem in the world is going to stop short of parlaying all of its 100% green energy into a cash cow? MDN, AAPL has never done as well as it deserves, and you know it. Perhaps if it sold more bullshit like Google or sold hardware at a loss like Amazon, Wall Street would love them more.

  6. I would never replace a computer with an iPad

    The real value in the education market is not the profit in the sales, its endearing future generations to Apple computers (which I’m not sure Apple is even interested in building anymore)

    1. Well, you REALLY endear future generations to Apple by having an iPhone in 80 to 90 percent of their pockets. That’s why “being in education” isn’t a hugely important goal, anymore. Whatever the school provides on desks or in computer labs, the students have iPhones and the first computing device they buy with their own money will be the one that works best with that iPhone.

      Most will find iPads sufficient for their needs, many others will opt for a mobile solution and precious few will opt for something stationary.

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