This is a summary from this morning, you can sign up To receive it in your inbox every morning from:
Apple (AAPL) has technical problems.
The stock has tumbled more than 6% over the past two days in its biggest back-to-back slide in 10 months. Apple has lost about $200 billion in market capitalization since Monday, when Chinese authorities are said to be asking government employees to stop using the world’s most popular phone.
The low-key move comes in the wake of September and ahead of the iPhone 15 launch event next Tuesday – when Apple fans will be treated to an improved periscope zoom on the flagship Pro model and another new charging port (USB-C), and perhaps a new color or two.
But the technical issue facing Apple right now is not in the phones it makes or the services it sells. It is a stock chart of the company.
Just a month ago, the world’s best stocks broke new ground in the company’s four-decade history. Apple’s stock hit a record high – followed only by an abysmal sell-off, a momentum never matched.
Historically, we have observed that the weakness may last for at least a month. Indeed, the stock put together a heroic rally in the second half of August, but the bearishness of the past two days has erased nearly all of those gains, leaving the stock hovering at multi-month lows.
With the big iPhone event days away, analysts are on the stock – but mostly is not Because the latest news out of Beijing is the attacks on the iPhone.
as if A recent note To clients, JPMorgan managing director and sell-side technology trader Ron Adler reminded investors that Apple stock usually moves ahead of events, but it does sell off.
Going back to Apple’s IPO four decades ago, according to Yahoo Finance data, the stock has seen gains in July and August. But it tends to decline in September, which was one of the worst months for the stock long before the iPhone was launched.
More recently, in 10 of the past 12 years, Apple stock has posted negative returns in September — consistently selling off after the iPhone launch.
Optimists may rightly note that October is typically Apple’s best month, based on the chart above. But this year is playing out differently. That August rally never materialized, and JPMorgan’s Adler argues that Apple stock is exhibiting unusually defensive behavior.
He notes that Apple has lagged as AI stocks rallied this year. It is exhibiting counter-cyclical behavior that serves as a source of funds for buyers of other stocks. After all, Apple is up a respectable 35% this year, but that’s a far cry from Nvidia’s ( NVDA ) 210% or Meta Platforms’ ( META ) 150% return.
Big picture, Apple is now experiencing three-quarters of its year-over-year revenue growth, prompting Sanford Bernstein to worry. Apple comparison For another tech stalwart, IBM (IBM).
Apple had similar pre-tax earnings from 2015 to 2023. [earnings per share] “Like IBM’s growth between 1997 and 2012,” writes Bernstein.Since peaking in 2013, IBM stock has fallen 58 percent and has traded mostly sideways since 2015.
Bernstein has two takeaways from IBM’s phone giant. First, “revenue growth issues” so Apple needs to focus on the top line. Second, strong profit growth alone is unlikely to allow Apple stock to stick with the rich multiples that consider it a growth company.
Adler at JPMorgan says if 2023 trends continue, investors could sell Apple stock after next week’s iPhone event and put the money into Meta, Microsoft ( MSFT ) and Nvidia ( NVDA ) — his group’s top three picks.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance