It has been a long marathon, and Apple has been running as if it were a sprint.
In the week that started on August 24, shares finally stalled out near the $500 mark. Year-to-date, Apple is still up about 70%, and remains one of the best performing mega-cap stocks. Apple took off after its fiscal third quarter earnings day, leaving the rest of the FAAMG group behind. Now, its peers had a chance to close the gap, by about 5 percentage points.
For the year, Apple has also outperformed the information technology (ticker $VGT) and consumer discretionary (ticker $VCR) sectors by at least 35 percentage points.
Here are some of the key factors helping to lift the stock this past week:
- As Apple has come under attack by developers over its App Store policy and fears mount over the impact of a potential WeChat ban in China, Wall Street analysts came to the rescue. I recently mentioned that sell-side love was about to kick in again, as price targets look stale. This week, Apple received three target bumps from analysts at Morgan Stanley, Cowen and Wedbush, all of whom reinforced their bullish theses and offered counterpoints to the bearish view.
- Apple seems to be ramping up its VR (virtual reality) and AR (augmented reality) efforts. The company acquired VR firm Spaces to tap into destination VR experiences and immersive Zoom calls. Bloomberg also reported that Apple is getting ready to add AR features to its TV+ service as a point of differentiation. After the 5G upgrade cycle, which plays out over the next few months, VR and AR could become Apple’s next catalyst for growth.
Apple’s week could have been better, if not for:
- The stock split-driven rally of the past couple of weeks has subsided. It seems clear that investors piled into the stock before three extra shares of Apple were awarded to each shareholder of record as of August 24. As soon as that date arrived, momentum waned.
- The App Store drama, featuring Epic Games and a number of sympathizers who claim that Apple has been taking advantage of developers in its position of gatekeeper, continued to unfold. It all started after the maker of Fortnite sued the Cupertino company over payment arrangements and commissions collected. Now, Facebook has become vocal about its own pain. While each individual battle is unlikely to hurt Apple in a meaningful way, a broader change in monetization policy could be a problem for the important growth engine that is the App Store.
Below is a chart that compares the performance of Apple stock against the S&P 500 and the industry. Apple’s dashboard looks great over a longer-term horizon, but less so from a trailing five-day perspective. Shares continue to trade at a historically high “premium” to 50-day and 150-day moving averages.
Explore more data and graphs
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(Disclaimers: the author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)