Apple shares have fallen more than 8% this week, wiping out about $200 billion worth and dragging the Dow and Nasdaq down. The iPhone maker is now officially in a bear market along with other tech giants.
Apple fell during a bad week for stock markets, which are selling off shares in nearly every industry on fears of a Fed hike, weakening consumer confidence, rising inflation and supply chain challenges. overall supply. The Nasdaq Composite is down more than 7% so far this week and is on track for a six-week losing streak.
Apple faces some supply chain challenges, but the outlook for its business hasn’t changed much this week.
The company has generally been viewed 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.
Jeff DeGraff of Renaissance Macro Research told CNBC Thursday that in a bear market there is nowhere to hide, and that includes Apple.
“For technology, when they start to take the lead in technology, it’s a better sign that they’re starting to take everything,” DeGraff said.
“Our guess is that the AAPL sell-off will continue, not because we know anything about iPhone shipments or service revenue this quarter, but because we believe that once investors start selling top names, they rarely do so at all.” one day”. “Datatrek co-founder Nick Colas said Thursday.
That trend marks a notable change from last November, when high-growth tech stocks began to slide and Apple often attracted investors looking for a lower-risk tech bet.
Apple still has prodigious cash flow, allowing it to weather 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 during the quarter to buy back its own shares and pay dividends.
And weakening consumer confidence hasn’t started to affect iPhone sales; in fact, in the March quarter, every single one of the company’s businesses grew except iPads, which Apple blamed on a chip shortage.
When CEO Tim Cook was asked about the effects of macroeconomic conditions and inflation on his business on 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 speaking, is on the supply side,” Cook said.
But even if Apple were to start feeling the pinch of deteriorating macroeconomic conditions, it remains a rare company with a world-famous brand, premium profit margins, stores in key shopping malls, and a collection of related products and services that appeal to the wealthy. . consumers around the world.
What’s more, if growth slows, Apple will continue to generate huge profits and sales, even if it is no longer the most valuable company in the world.