Why Apple stock is struggling

Apple stock is struggling and is, in fact, down this year despite two massive earnings beats. A high bar for growth and the threat of rising taxes may be the two biggest culprits, Bill Maurer writes.

Why Apple stock is struggling

Bill Maurer for Seeking Alpha:

We are just a few weeks away from the midpoint of 2021. If you had told someone that technology giant Apple would have reported two of the biggest earnings beats in corporate history so far this year and yet the stock would have significantly underperformed the NASDAQ Index, they might not have believed you. However, that’s just where we are now, as the chart below shows how the stock has declined 5.1% through Monday despite the Index’s nice gains.

In my last Apple article, I discussed how the company was becoming a victim of its own success. Because the two earnings reports so far this year were so great, the thought process has shifted to can Apple ever do any better? In this case, I’m not talking about strict dollar amounts, but growth percentages. Look at the chart below, showing how once we hit the December 2021 (fiscal Q1 2022) quarter, revenue growth rates are expected to crash down.

Source: Seeking Alpha estimates page
Source: Seeking Alpha estimates page

I said previously that Apple bears would jump at the possibility of Apple announcing a revenue decline for the March 2022 fiscal quarter, even if it is due to the previous year being one of the best quarters we’ve ever seen.

MacDailyNews Take: Yup.

‘Tis the fiscal Q2 tough compares to come and how the market digests / uses / abuses them, rationally or irrationally, that will be the most interesting for Apple.

After years of pent-up demand for iPhones with larger displays, when the company finally made them with the iPhone 6 and iPhone 6 Plus, Apple faced years of tough compares vs. fiscal Q215 until they finally just stopped reporting unit sales altogether.

Apple’s crazy Q221 revenue figure could stick out as a sore thumb for years and be used by naysayers, shorts, fomenters, etc. to talk down the stock every spring.MacDailyNews, April 30, 2021

Fortunately, Apple’s overall revenue trajectory remains strong, and I think management has a solid plan in place…

The second item I believe investors are a little worried about is the potential for rising taxes. The first part of this would obviously be higher taxes on the rich, especially capital gains taxes, that could limit investment in stocks.

MacDailyNews Take: Not just the “rich” are hit by higher capital gains taxes.

More than half of American households have some investment in the stock market, according to the Pew Research Center. Even among those with annual family incomes of less than $35,000, about one-in-five have assets in the stock market. Data from the Federal Reserve’s Survey of Consumer Finances shows that 53% of all American families owned publicly traded stock in some form in 2019, so increased capital gains taxes affect far more Americans than just “the rich.”

The threat of a capital gains tax increase dampens investor enthusiasm and limits market participation.

For Apple though, the issue would be higher corporate taxes, which obviously would impact the profit monster. For instance, the difference between an overall tax rate of 15% versus 18% for Apple in its fiscal 2022 year (based on current estimates) is roughly $3 billion in net income, or almost 20 cents in EPS. A nickel per quarter headwind makes it harder to impress investors, especially when you are coming off the best year in your history…

Right now, Apple shares are stuck in a trading range, as the chart below shows. The 50-day moving average (purple line) is forming resistance, while the 200-day (orange line) is forming support. The next major move can occur once Apple can get out of this channel, and investors are hoping it is to the upside, which could form the base to get the stock to new highs. If shares drop, the 50-day could cross below its longer-term counterpart, which would be the dreaded technical death cross.

MacDailyNews Take: Apple stock is currently range-bound, but a breakout (positive or negative) could happen at any time. AAPL remains undervalued, but concern about future tough compares continue to weigh on AAPL.

53 Comments

  1. Raising capital gains taxes would be a stupid move — coming out of moronic, never-ending mass lockdowns for a virus that should simply have had non-working elderly and unhealthy at-risk individuals (obese, diabetic, asthmatic, etc.) protected instead while the rest of the world continued as normal — so, of course Biden’s leftist puppet-masters are all for it.

    1. Are we talking about the virus that has killed almost 600,000 Americans despite the protective measures you think were unnecessary? The rest of the world has hardly continued as normal. They have either applied draconian measures like China or suffered a massive dieoff like India.

      1. Everything you think you know about the virus is a lie. The truth is just starting to be unveiled. Fauci is a liar, the death toll is a lie, but you are too gullible to know it.

            1. Been a while since I have logged on here but I came just to see Hal, the moron, come and give his opinion….which is simply swearing and acting like a spoiled child.
              As I have said every time to people like Hal and the pimple on his butt, aka First Then, it is people like you and your selfish, stupid thinking that are the reasons why we are in this pandemic. If you guys just shut up, got your vaccine, masked where appropriate, we would have never gotten to this stage. YOU ARE THE PROBLEM. Get it? I doubt it but I can always hope.

    1. Odd fact: there are fewer drunk drivers killed in traffic accidents than the number that they kill. There are fewer people who refuse to wear masks that die than the number that they kill. Almost nobody who is vaccinated dies, but not everybody around a vaccinated person who has an asymptomatic case is vaccinated. Unvaccinated people are more likely to wear masks, and thus less likely to die, if the people around them are wearing masks. It is not stupid or sheeplike to care about others.

      1. You need to be told again????? Twice in the same day????

        Everything you think you know about the virus is a lie. The truth is just starting to be unveiled. Fauci is a liar, the death toll is a lie, but you are too gullible to know it.

        1. Do I have to also say it twice in the same day? You are both stupid and selfish. Do you think the WHOLE world is wrong and you are right? ….sheeeesh…. You and First Then, dumb and dumber…or should I ramp it up a notch…. Dumber and dumbest!

    2. They’re able to keep up with the news that there are other variants circulating that the current vaccines are not as effective with unlike those that think they’re immune after one regimen of the vaccine meant for protection from the first version.

    3. Simple. People are still dying of Covid 19. Seven died on Monday in my st of ct. indoors I keep my mask on while shopping. So easy. I would rather be safe then sorry and dead.

    4. Fun fact… every person in that video was Republican or worse… doesn’t vote. Gasp!

      In all honesty… I’m always shocked at how opinionated Americans are and how willing they are to tell people what to do… in the end… where he’s “pressuring” people to take off their mask… and then telling people not to succumb to peer pressure. That’s rich.

      Interesting sidenote. Regular ol’ influenza has completely tanked in the last year since people started wearing masks, staying home when sick, and washing their hands more often. This pandemic has done wonders for regular sicknesses. COVID is just FAR more virulent.

      1. “Fun fact… every person in that video was Republican or worse… doesn’t vote. Gasp!”

        Not a “gasp” brainless Leftist baloney that doesn’t have a grip of reality. You got no prevailing narrative out of the video? Of course not, gee what a surprise.

        It’s amazing how easily Democrats are programmed and brainwashed to believe their party dogma without question and critical thinking skills. The video can confirms it without question. Particularly sad is the young in college now for the first time the dumbest generation in USA history.

        God help us…

    5. “Malleable pawns” is the best term in the WOKE era to describe Democrats totally devoid and lifeless to reality. No critical thinking skills particularly for the young and college students so easily manipulated and brainwashed with party dogma…

          1. Apparently, you are too fucking stupid to understand concepts. As expected.

            Actually, we fought for your freedom to say incredibly stupid things. Having the right to say them however, does not eliminate the consequences. Have a 2nd grader try to explain that to what’s left of your mentally retarded, drugged brain.

      1. Voting for Dementia Joe because you don’t like Trump is like eating dog shit because you don’t like broccoli

        You are too stupid to know the damage you have done

        1. No. I don’t like being lied to each and everyday. I know politicians lie, but Trumps lies were over the top and borderline crazy. He just made up narratives to support what he wanted to do. Much like Black Lives Matter and the rest of the woke folks.

    1. The word is he got mostly Ds.The most prolific liar in Presidential history. Trump has caused 100s of thousands of deaths because he put his re-election first over lives. He should receive capital punishment for his despicable actions.

      1. He could eliminate those rumors by releasing his transcripts. Instead, he has notified every school he ever attended that he will sue them into oblivion if they divulge any information about him. Would you do that if your academic record didn’t show that you were not in training for The Apprentice, but for The Biggest Loser? Same with his tax returns. This is the same guy who demanded that states that had already recounted and audited their election results multiple times should allow random partisans unlimited access (behind closed doors) to their ballots and voting equipment on the grounds “What do they have to hide?” What does he have to hide?

  2. I’ve been reading your website for many, many years. Your personal political bent is showing, and it does not benefit the website. It bleeds into the Feedback column, whose comments veer into the asinine thanks to a healthy dose of partisan douchebaggery. Get back to covering all things Apple, which you have done quite well for a long time. Thanks.

    1. I concur and taking care of the barrage of personal insults that goes flying about this place would be another huge step away from making this place feel like it’s a hate site.
      It used to be a lot of fun coming here to have civil dialogue with people.

        1. This is MDN’s site, they decide which posts stay and which go as is their privilege.
          Did you say stolen elections? There was more than one? What a farce Apple’s home country has become. Thanks for the laugh.

      1. So says the Number One HATER of America for years! Where I come from that is called HYPOCISY of the worst kind. If it’s no longer fun for Libtards like you that once controlled the narrative, no one is forcing you here so just leave and the place will improve…

    2. PL Ranger,

      FYI: It is a fact, not a “personal political bent,” that capital gains taxes do not just tax “the rich.” MDN provided the clear evidence to back up that fact. You chose to ignore it. You sound like you watch a lot of MSNBC and/or CNN.

    1. The same could be said of countries fueled by the estrogen of their majority group, rather than the testosterone of the minority.

      So, do you want to repeal the 19th Amendment and the gender discrimination provisions of the 1964 Civil Rights Act? You might want to consider repealing the 14th and 15th Amendments, too, so that race and national origin discrimination aren’t protected either. And then there is the 24th. Without that, you could legally prohibit poor people from voting. Repealing the free exercise and establishment clauses of the 1st Amendment will allow religious discrimination, so the few remaining voters can lawfully vote the Republic of Gilead into power. I gather you would be happy with that.

      You are entitled to your opinions, but you cannot plausibly claim that they are remotely consistent with the Constitution of the United States (known to the Trumpist Capitol Gang as “toilet paper”).

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