Apple is getting smoked. Again.
The stock is down about 2.3% after being down as much as 4% on Tuesday.
And shares of Apple are now down more than 14% since July 20, the day before the company’s earnings report.
There’s no obvious reason for the stock to be dropping right now (except maybe more sellers than buyers!), but this does continue an ongoing decline for Apple, since the company reported weaker-than-expected iPhone sales.
But even though iPhone sales were lighter than expected, Apple still beat top- and bottom-line estimates.
Regardless! The stock is dropping and investors can find plenty of reasons to be worried about this latest drop … and reasons to be completely unconcerned.
The reason for concern: In September 2012, Apple started falling without an obvious reason. It just kept on tanking and didn’t hit a bottom until April 2013.
A reason for comfort: Apple rose again! Starting in June 2013, the stock marched upward, reaching new highs on the back of the iPhone 6 sales and speculation about the Apple Watch.
A reason for concern: Many people think Apple has tapped out the iPhone 6 opportunity. As a result, growth will be much harder to come by in the next 12 months. The company’s watch has received mixed reviews, and nobody can quite grasp how big or small the opportunity is. And this is all leaving out the fact that iPad sales continue to contract.
A reason for comfort: Apple has repeatedly said it is getting more and more people from Android. It also says only 27% of people who owned an iPhone before the iPhone 6 was released have upgraded to an iPhone 6. That means 73% of iPhone owners, or about 300 million people, are due for an iPhone upgrade. Not to mention all the people who own feature phones or are buying their first mobile phone.
A reason for concern: Investors are tough to figure out. Stocks go up, stocks go down. And often it doesn’t make sense until well after the fact, and even then. So, Apple could tank for the next year, and it may not make much sense for the first six months. And it may never make total sense.
But an ultimate, final reason for comfort: Apple remains a strong business that is pumping out billions in cash. The iPhone is on steady footing, and while they missed analyst expectations, iPhone sales were still up 35% year-over-year, a huge improvement for a business that did $US31 billion in sales last quarter.