Apple Stock’s 2021 Journey Through March

Apple shares finished the first quarter down 8%. The Apple Maven recaps the journey through the first three months of the year, and tells the story of a stock that remains stuck in second gear.

Author:
Daniel Martins
Publish date:
Apr 1, 2021

The first quarter of 2021 is finally over. The period made winners (small cap, cyclical) and losers (high valuation, defensive) in the stock market. Apple stock took the rougher road, after a stellar year of returns in 2020, and finished the quarter down 8% year-to-date.

Today, the Apple Maven recaps Apple’s journey through the first three months of the year, and tells the story of a stock that has been stuck in second gear for a few months.

History-lagging performance

Over the past ten years, Apple has returned an average of 6% through the first quarter months. Therefore, compared to its own recent history, the stock had a particularly weak January-to-March 2021 period.

Regarding risk, Apple shares endured annualized volatility of 33%, a solid five percentage points more than the past ten-year average. The peak-to-trough decline reached a sizable and nerve-wrecking 19% in a matter of only six weeks, between late January and early March.

*Average Monthly Return, Seasonality AAPL Stock since 2011*
Stock Rover

Market-lagging returns

The 8% decline in Apple shares compared negatively to the S&P 500’s 6% gain. The broad market index, however, may be a bit too generic of a benchmark to illustrate the market dynamics in the first period of 2021. Below are some year-to-date references that are more relevant to Apple:

The tech-rich Nasdaq climbed a modest 2%
The tech sector was up a bit more than 1%
The consumer discretionary sector climbed a respectable 5%
The equal-weighted FAAMG ex-Apple group returned 9%

A story of ups and downs

To understand what key factors drove Apple stock since the start of the year, it helps to look at the best and worst days of performance. On the way down:

Apple shares declined 4.2% on March 8, the worst day of trading since October, to reach the lowest levels since November 2020. The key driver of poor returns was macro-level: Congress made progress on a COVID-19 relief bill, and the 10-year treasury yield climbed further to nearly 1.6%. This dynamic is favorable to reopening stocks, but not to tech growth ones.
Apple dropped 3.7% on the last trading day of January. The dismal performance followed an equally scary day in which shares had sunk 3.5%. This was clearly a “sell the news” correction following Apple’s impressive fiscal first quarter results that had pushed the company’s stock to all-time highs a mere couple of days earlier.

But on the way up:

On January 21, Apple stock finished the day up 3.7%. This was only one of six consecutive trading sessions of positive returns that preceded fiscal first quarter earnings. It became clearer by the day that Apple would impress with holiday period results. Investors responded with enthusiasm that eventually reversed course, later in the quarter.
Shares had their best day of performance in the quarter on March 1. First, the 8% decline of February set the stock up for a buy-on-weakness rebound. But also, all US-based Apple stores were reopened for the first time since the start of the pandemic. Lastly, Warren Buffett sent bullish vibes, praising Apple in his annual letter to Berkshire Hathaway shareholders.

Twitter speaks

The Cupertino company’s stock had a rough start to 2021, but I wonder if Apple investors are too concerned about market-lagging performance in the first three months. I asked Twitter for an opinion: