“On Monday, shares of technology giant Apple led the market lower, falling more than 5% to their lowest level in a couple of months. The decline came after Lumentum, a company that supplies lasers for Apple’s Face ID system, warned of a revenue shortfall, increasing fears over an iPhone slowdown,” Bill Maurer writes for Seeking Alpha. “While some are starting to wonder if this is a repeat of the 2015-2016 period where Apple shares lost a third of their value… the situation today is much different, and that’s a good thing.”
“The last major iPhone panic came in 2015-2016 with the iPhone 6S line launch. Perhaps the biggest issue was that the iPhone 6 did so well that Apple could not hit a home run in back-to-back years. Last year, Apple did really well with the iPhone X, and this year we have the problem of management deciding to no longer report unit sales,” Maurer writes. “iPhone unit sales have been rather flat in recent years… Apple itself is also a much different business than it was three years ago… Apple’s services segment has basically doubled in three years, soon to be 20% of the overall business. Throw in sales of newer products like the AirPods, HomePod, etc., and we don’t have to focus as much on iPhone unit sales each quarter.”
“The Street is currently calling for revenue growth of about 7% and for earnings per share percentage growth in the low teens. Even if those estimates come down based on all of the bad news we’ve been hearing recently, what’s the worst that you can imagine, flat year-over-year revenues? At that point, we’re still nowhere near a 10% revenue decline, and management’s recent $20 billion a quarter buyback pace will certainly help EPS, especially if shares continue declining,” Maurer writes. “Throw in major tax changes, and the financial situation has improved too. While Apple investors may feel some pain in the short term, there is nothing structurally wrong here that worries me about Apple in the long run.”
Read more in the full article here.
MacDailyNews Take: Own AAPL, don’t trade it. – Jim Cramer
Be fearful when others are greedy and greedy when others are fearful. — Warren Buffett
SEE ALSO:
Guggenheim downgrades Apple, cuts earnings outlook – November 14, 2018
Apple lost the perception game in the short term – November 8, 2018
Proof of Apple’s pricing power wasn’t enough to assuage the market – November 7, 201
Apple’s focus is not iPhone market share, it’s on dominating the higher end of its markets – November 3, 2018
Apple’s iPhone just had its best year ever – November 3, 2018
Why Apple’s unit sales reporting doesn’t matter anymore – November 2, 2018
The ‘smart money’ shrugs off Apple’s decision to no longer disclose unit sales – November 2, 2018
Apple rams their message home: Think ‘Apple as a Service’ – November 2, 2018
Investors bristle as Apple occludes iPhone unit sales data – November 2, 2018
Apple’s decision to stop reporting unit sales of iPhones, Macs, and iPads is a ‘defining moment’ – November 2, 2018
Apple to stop reporting iPhone, Mac, and iPad quarterly unit sales – November 1, 2018
Apple tumbles 7% after reporting record-breaking quarterly earnings – November 1, 2018
Apple beats Street with another record-breaking quarter – November 1, 2018
WTF?
Forward P/E is looking really cheap if you count in actual earnings growth plus impact of anticipated buybacks over the next couple of years. I have to believe that Apple has been buying back an awful lot of shares over the past week.
Apple is no different today than it was a month ago but merely valued for a lot less. Fear and greed can do that to any stock even when fundamentals are intact. I had always thought good analysts model for an entire year but now they model from quarter to quarter which doesn’t seem quite practical for average retail investors. It might be great for fund managers who don’t give a damn about anything except huge stock gains. It’s just that those damn big investors greatly destabilize the market for everyone else as they move their huge amounts of money from place to place looking for any sort of gains.
I’m not sure exactly what sent Apple stock into the toilet.
1. iPhone sales not meeting expectations?
2. Conservative guidance for the next quarter?
3. No longer reporting unit sales for products?
4. China tariffs?
I honestly don’t think any one of these should cause a 18% dump for Apple but something did. Pure fear? I’m not concerned as long as Apple is buying back stock and I’m getting my dividends. I’m not worried at all and I’m sure Warren Buffett isn’t worried, either. I think only the greedy investors and those who buy stocks on margins are worried. I’m long Apple 15 years and have no regrets.
In many cases it has absolutely nothing to do with AAPL. This week a lot of hedge funds are getting absolutely crushed on bad oil trades (had bet long on oil/short on nat gas, and both are moving in the wrong direction) and there are big margin calls on these trades and funds need to raise cash. if the hold AAPL with gains they will take them.
Thumbs up both to you and mac-48
Fear that Trump will throw the international trading system into chaos, mangling Apple’s supply system and creating anti- American backlash against America’s international companies and their products, of which Apple is the most visible target.
I’m surprised that these guys can’t see why Apple did a drastic pull back.
Mac Sales are down and that segment of Apple is neglected by management for many years and the current upgrades are hardly a good value. Who pays top dollar for an i3 processor?
iPhones sales are down or stagnant and earnings were only up due to a rise in pricing.
Ipad sales down.
They are going to hide iphones sales to stop the bleeding. Like the tried to hide it by raising the prices to keep revenue up.
Services is up, but Apple is a hardware company and their services are driving by the hardware. Since Pipeline is now a one trick pony and your pony starts to struggle people notice. Pipeline and putting all his apples in the iphone basket.
Since the market is forward looking it’s not a surprise at all.
Now add in all the other market influences and you get further drop in price. Worse thing that ever happen was Apple was added to the index.