Apple the stock fell more than 8% this week, wiping out about $ 200 billion in value and dragging the Dow and Nasdaq indices lower. Apple is now officially in a bear market along with other tech megastocks.
Apple fell during a bad week for equity markets, which are selling off stocks in almost every sector on fears of a Fed rate hike, weakening consumer confidence, rising inflation and challenges. of the supply chain around the world. The Nasdaq Composite has dropped more than 7% so far this week and it is abreast for a six-week losing streak.
Apple faces some supply chain challenges, but the outlook for its business hasn’t changed significantly this week.
The company has generally been seen as a “safe” place for investors to park their money. The fact that it is selling off along with everything else is a bad sign for other stocks and a sign of deteriorating investor confidence.
Renaissance Macro Research’s Jeff DeGraff told CNBC on Thursday that in a bear market there is nowhere to hide, and that includes Apple.
“For technology, when they start taking leadership in technology, it’s a better sign that they’re starting to take everything,” DeGraff said.
“Our assumption is that AAPL’s selloff will continue, not because we know anything about iPhone shipments or service revenues this quarter, but because we believe that once investors start selling the top names, they rarely do in a day, “Datatrek co-founder Nick Colas said Thursday.
It’s a notable turnaround from last November, when high-growth tech stocks started falling and often Apple attracted investors those looking for a low-risk bet on technology.
Apple still has prodigious cash flow, which allows it to endure slowdowns and return profits to shareholders. It generated $ 28 billion in operating cash flow in the March quarter on total sales of $ 97.3 billion. It said it spent $ 27 billion during the quarter to buy back its stock and pay dividends.
The weakening of consumer confidence hasn’t begun to hurt iPhone sales: in fact, in the March quarter, all of Apple’s business grew except iPads (which Apple attributed to a lack of chips).
When CEO Tim Cook was questioned last month about the effects of macroeconomic conditions and inflation on his business in an earnings call, he said the company’s biggest problem was producing enough iPhones and Macs to meet global demand. , not a slowdown in demand.
“Right now, our main focus, frankly, is on the supply side,” said Cook.
But even if Apple were to start feeling the effects of deteriorating macroeconomic conditions, it remains a company with a world-famous brand, premium profit margins, stores in major shopping malls, and a collection of related products and services that appeal to consumers. wealthy around the world. the world
If growth slows, Apple will continue to generate huge profits and sales, even if it no longer is the most precious company in the world.