Apple stock has fallen more than 8% this week, wiping out around $200 billion in value and dragging down the Dow and Nasdaq indexes. The iPhone maker is now officially in a bear market alongside other tech giants.
Apple fell in a bad week for stock markets, which are selling off stocks in almost every sector on fears of a Fed rate hike, weakening consumer confidence, rising inflation and global supply chain challenges. The Nasdaq Composite is down more than 7% so far this week and is on course for a six-week losing streak.
Apple is facing supply chain challenges, but the outlook for its business hasn’t changed materially this week.
The company has generally been seen as a “safe” place for investors to park their money. The fact that it is being sold along with everything else is a bad sign for other stocks and a sign of deteriorating investor confidence.
Jeff DeGraff of Renaissance Macro Research told CNBC on Thursday that in a bear market, there’s nowhere to hide — and that includes Apple.
“For tech, when they start taking the leadership in tech, that’s a better sign that they’re starting to take it all in,” DeGraff said.
“Our assumption is that AAPL sales will continue, not because we know anything about iPhone sales or service revenues this quarter, but because we believe that once the investors are starting to sell the best names, they rarely do it overnight,” Datatrek co-founder Nick Colas said Thursday.
The trend marks a notable reversal from last November, when high-growth tech stocks began to tumble and Apple often lured investors looking for a lower-risk tech bet.
Apple still has a prodigious cash flow, allowing it to ride out downturns and return profits to shareholders. The company generated $28 billion in operating cash flow in the March quarter on total sales of $97.3 billion. It said it spent $27 billion in the quarter to buy back its own shares and pay dividends.
And weakening consumer confidence hasn’t begun to hurt iPhone sales – in fact, in the March quarter, every one of the company’s businesses grew except for iPads, which Apple blamed it on a shortage of chips.
When CEO Tim Cook was asked about the effects of macroeconomic conditions and inflation on his business during an earnings call last month, he said the company’s biggest problem was making enough ‘iPhones and Macs to meet global demand – not a slowdown in demand.
“Right now our main focus, frankly, is on the supply side,” Cook said.
But even if Apple were to start to feel the impact of deteriorating macro conditions, it’s still a rare company with a globally recognized brand, superior profit margins, stores in key malls and a collection of related products and services that attract the wealthy. consumers around the world.
Moreover, if growth slows, Apple will continue to generate huge profits and sales, even though it is no longer the most valuable company in the world.