2 years agoIn case you missed it, here’s Tim Cook’s full 10-minute interview last week with Fox Business:
Finally, by popular demand, Apple vs. the S&P 500:
Although I am now, finally, an Apple shareholder (see Why I bought a share of Apple, my first), I still have nothing to add. Don’t blame me if you drain your IRA doing something you read about here.
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Airpod Pros were sold out in Bay Area stores last few days. Now they are available again. Also, all iPhone models and other hardware are available (same in Europe).
Thus, supply does not seem to be a problem yet with respect to end consumers even though factory ramp-up in China is slow after Chinese New Year due to Corona Virus.
Second, production seems to be picking up, since yesterday’s Airpod Pro delivery should have been produced after the Corona Virus outbreak.
All in all, effects from a supply side should be limited so far. Demand side will be different, though …
In Apple’s conference Luca always refers to inventory thusly: “We finished the quarter with…..”. That doesn’t mean finished goods inventory was maintained at a constant level.
The upstart of this is that, with diminished sales activity in China (the hardest hit country in the world), inventory originally earmarked for Chinese consumption is being shipped elsewhere, ergo, for the foreseeable future the only market that will be adversely impacted by a production slowdown will be China.
Being ~20% of Apple’s revenue that’s a great deal of inventory that can (will?) be diverted elsewhere.
The math then, hypothesizes that the total decline in Apple’s revenue guidance will be about 7% (other factors included in calculation).
“Is it possible that Apple prepared for Lunar New Year production slow down (as it might every year) by maintaining December quarter production levels until the holiday began, thus having a larger than usual finished goods inventory on hand?”
That probability has been suggested, as have the conclusions you’ve drawn from it. It’s one of the reason I’ve been more upbeat than some.
“All in all, effects from a supply side should be limited so far. Demand side will be different, though …“
I’m not so sure. In China, for example, Apple has gone out of its way to be compassionate. (See “Apple is sending care packages to stranded employees in China” in AppleInsider). That goes a long way. Now, one can be cynical and say it’s just business, but I’d submit that this kind of thing has become instinctual with Apple.
Yes, there’s an ongoing and growing negative impact on the world economy. But the degree that’s going to impact Apple is unknown, just as it’s unknown for the world economy generally. But if the last year has taught us anything, it’s to not get ahead of the facts.
Anyone know how to catch the falling knives?
Today’s market is fertile proving ground for the true Apple faithful.
Add to the data the politics of it all and “bad news sells” and I expect a week of negative news stories.
Not reported in today’s media frenzy is that, as it currently stands, COVID 19 is less than 3X deadlier than influenza A and influenza B. By extension that indicates less than 20,000 COVID 19 of US related deaths in a total population of approximately 350,000,000 by the first of August. If you’re black the odds of being shot to death in Chicago are higher.
Well, on Friday, it was about equal. The day ended flat as a pancake. Just as importantly, 106.7 M shares traded hands, equally divided by definition between buyers and sellers. In calmer times, like a month or so ago, that number was down around 25 M.
Clearly, with this market, we have a huge battle going between fear and greed. Could we see even more retrenchment? Absolutely. But clearly, the dynamic isn’t one way. Huge bets were made Friday that the bottom has been hit.
Personally, as I’ve made clear, I see the tail, aka the pre-market, as having successfully wagged the dog all week – except Friday. Now, we don’t really know where we’re heading vis-a-vis COVID-19, which is the black swan event behind the selloff. Nor do we know what other black swans are in our future. But specific to next week, I think it’s even money that the tail won’t be wagging the dog as effectively as it did last week.
We’ll see.
And as I have been saying the pre-market is nothing more than a continuation of investor sentiment from the day before [based on available news/knowledge at that time] just as markets in Asia and Europe can be pre-cursors for what will happen in the US later in the day.
The only causation effect, in how pre-market trading transpires being transferred to regular hours trading, is derived from the extension of investor sentiment from one session to another.
IOW, regular hours trading extends to after hours trading, that extends to pre-market trading and back to regular hours trading, provided available news remains constant.
If a small investor is not playing options and is not buying on margin, there are only two days Apple’s share price matters to the investor – the day the investor buys shares of Apple and the day the investor sells the shares of Apple.
I’m sure Apple is prudently taking advantage of the recent pullback in the share price. I’m also sure there will be many astute long-term investors that will be shopping for value investments based on fundamentals as the recent and ferocious selling pressure subsides.