Apple sits on a gazillion metric tons of gold, has a billion customers, and can weather economic storms that will drive other companies out of their respective industries or out of business. But if you bought APPL at $220 then you might think this past year has been the worst ever.
Just how bad are things in the smartphone arena? Bad. Very bad. Samik Chatterjee of J.P. Morgan:
2019 Will Be The Worst year In The Smartphone Era
That’s bad alright. Bad I tell you. How bad?
So bad that smartphone sales will decline after hitting something of a plateau the past couple of years. Instead of expecting a 1-percent decline, J.P. Morgan expects a 9-percent decline (not far off the approximate 7-percent decline that Apple retro-predicted for the past quarter).
We believe the softer volumes were driven by worsening macro weakness in emerging markets (particularly China, where smartphone units tracked -20% y/y in 4Q)
Remember, that’s smartphone unit sales projections in general, though I worry that analysts consider China an emerging market when saturation is the name of the game. Assume that CEO Tim Cook’s new projections are accurate, then Apple seems to be doing OK everywhere except China, and perhaps not as bad as competitors. Even Samsung rejiggered financials to account for the drop in sales.
Is this Apple’s worst year ever? Hardly.
APPL maybe, but just remember the stock grew more under CEO Tim Cook than under Steve Jobs. Even in a soft market, Apple will sell 200-million new iPhones; each with higher gross margins than any major competitor, and while the market may not look great in unit sales, Apple leads revenue and profits, both of which are more valuable metrics than marketshare.
One can argue that the past six months are part of APPL’s worst year ever. I had trouble checking back a few decades to see similar drops in the stock price.
How bad does this look to you? It depends, right?
There was a short term bloodbath recently, but looking backwards, you’ll see a few others but from a lesser perch than the recent run up to $233 per share. The vertical line is APPL shortly after Steve Jobs died in 2011. By that measure, Tim Cook seems to have done a good job running Apple and APPL responded well.
There is no way anyone can consider Apple a financially troubled company, and even APPL, with a recent dip, has returned more to shareholders in recent years than any of them may have suspected or expected when they bought APPL. Everyone wants to buy low and sell high, but for every share sold during the past few months there was a buyer.
I wonder why investors buy a stock after it drops so low?