Apple Stock This Week: Playing With The Bear

Daniel Martins

The selloff in Apple shares has picked up steam.

After the stock fell off the bed in the first few days of September, Apple continued to lose market value in the second week of the month. This has been the worst week in the market for the Cupertino company since the sharp March 2020 correction: -6.9%. The S&P 500 also dipped, but only by -2.5%. Between the broad market and Apple was the FAAMG ex-Apple group, down -5% for the week.

Investors who bought Apple at the start of 2020 are still well above water. Year-to-date, the stock is up about 54%, although it continues to come down fast from a peak of 84% on September 1. So far this year, Apple has outperformed the information technology (ticker $VGT) and consumer discretionary (ticker $VCR) sectors by at least 30 percentage points.

Bullish drivers

It is hard to speak of bullishness this week. The only good news, as far as I can tell, was Wall Street’s unfazed optimism towards the stock, even after the sharp selloff. Although “bears will be bears”, as evidenced in Goldman Sachs’ less encouraging tone, the usual bulls remained firm in their convictions.

Wedbush’s Dan Ives is still excited about the 5G supercycle, citing his channel checks. Baird’s William Power went further and increased his price target on Apple, justifying optimism on the back of “the strength of the ecosystem including further iPhone share gains, strong wearables growth, and potential 5G upside” – conclusions drawn from his company’s recent consumer survey.

Bearish drivers

Apple’s week never looked strong. The two main developments pushing the stock price lower were:

  • Valuation pullback: sure, there have been questions raised about Apple’s short-term prospects. It is also true that the App Store remains under attack by Epic Games and other tech companies. But the reality is that the recent decline in Apple’s share price is most likely associated with a re-rating of the stock, given the astonishing rally earlier in 2020. Apple is about one sneeze away from entering bear market territory (i.e. a 20% drop in stock price from the peak), but the correction seems minimal compared to the stock’s 150% gain of the previous 12 months.
  • No new iPhone? It took Apple longer than usual to schedule its September product refresh event. When it did, speculations surfaced that the iPhone 12 would not be unveiled in the current month. The longer Apple takes to announce its new smartphone lineup, the more doubtful investors will be about the robustness of the 5G “supercycle” – at least in regards to short-term financial performance.

Below is a chart that compares the performance of Apple stock against the S&P 500 and the industry. Apple’s dashboard still looks very good over a longer-term horizon, but much less so from a trailing five-day and one-month perspective.

Explore more data and graphs

The data used in this report was provided by Stock Rover. I have been impressed with the breadth and depth of information on markets, stocks and ETFs that this platform provides. Stock Rover also helps to set up detailed filters, track custom portfolios and measure their performance relative to a number of benchmarks.

To learn more, check out stockrover.com and get started for as low as $7.99 a month. The premium plus plan that I have will give you access to all the information that went into my analysis and much more.

(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)

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