What’s gone wrong with Apple’s stock?

In fact, Apple is trading in line with a decade’s worth of share price increases following the release of a new iPhone.

From Tiernan Ray’s “The shares have been a dog, but don’t lose heart” posted in The Technology Letter last Friday:

The company had an absurdly good quarterly report on January 27th, and the shares responded by selling off the next day by about four percent.

Apple is now down almost two percent since the start of the year, at a recent $130.13, trailing the four percent gain in the Standard & Poor’s 500 index. Most of Apple’s mega-cap brethren have done better. Alphabet is up twenty percent, Tesla is up twelve percent, and Amazon is up almost two percent.

Have no fear, for the shares are actually trading in line with the prior decade’s worth of price increases following an iPhone introduction.

I’ve updated the chart of a decade’s worth of Apple stock-price increases, which starts from when an iPhone was introduced and shows the six-month and the twelve-month gains.

apple tiernan ray chart

Moreover, in the accompanying bottom chart, the graph of twelve-month returns, the progress so far, represented in the thick magenta line, is kind-of trending the way the 2019 to 2020 price trend moved, which is highlighted in purple — royal purple, as in, the best. (That was the iPhone 11.)

apple tiernan ray chart

My take: Apple is down more than 3% since Ray created these charts, and in premarket trading Tuesday it fell another 3%. Is OK to lose heart now?

22 Comments

  1. Robert Harris said:
    My take not much about the market ever makes sense. Amazon also had amazing quarter and has been trending down.

    2
    February 23, 2021
  2. Troy Thoman said:
    Premarket takes their PE ratio to 33.4 and their Div Yield to .664% with increased earnings and a dividend hike on the horizon. Seems cheap to me.

    4
    February 23, 2021
  3. Tommo_UK said:
    Liquidation and fund raising and profit taking thanks to all the talking heads going on non stop about non existent inflation, the imminent collapse of the market thanks to utterly inconsequential rise in the 10-yr and the turmoil and margin calls caused by the assholes trading things they don’t understand on Robin Hood discovering that the opposite of up is down.

    People are waiting for all this crap to die down. That’s why when the GSE and BTC phenomenon blew up I stated I was selling out temporarily.

    Musk should be shot for his jokes designed to elevate BTC and then profit billions from it, knowing how his comments would influence markets.

    Apple is the strongest and largest company in world. Its stock is an ATM. There may not be many buyers right now while this discombobulated situation overrides the market’s ability to discern fact from fiction but the absence of buying leads to an ongoing slow decline.

    “Democratising the markets” my ass. More like handing kids loaded revolvers and telling them to play cowboys and Indians in the playground, and then acting surprised when kids and teachers get shot.

    5
    February 23, 2021
    • Tommo, I agree with your first paragraph. GME is again heating up again, no doubt some hedge funds had stepped back in that somehow attractive cesspool. I don’t enjoy the Reddit forums & tales of Robinhood but they remain popular for younger blokes.
      Apple’s share price dive is a very familiar roller coaster ride for a 15-year investor like myself. Picking a bottom to buy a few more shares is like trying catch that ‘falling knife.’ This activity may shake the trees, removing day traders feeling under the cosh. Musk also keeps throwing a spanner in the works. TSLA is a bubble, iPhones are hardly tulip bulbs.

      4
      February 23, 2021
    • Mark Visnic said:
      @Tommo

      Here are the facts:

      The 10 year Treasury was higher 12 months ago than it is now. It remains very low. It went to extreme lows in response to deflation fears from a pandemic-driven panic as GDP fell double digits. Now, it’s a matter of returning to an equilibrium level in a low inflation world that has technology driven systemic deflationary pressures. Talking heads, talking their book are providing dire warnings of pending out of control inflation and warning of discount rates crushing equity valuations of long duration equities, oitherwise known as growth stocks. Continued.

      2
      February 23, 2021
      • Mark Visnic said:
        Continued. The sell-off in Apple is a farce. 1. Apple is not a long duration equity in the sense that it promises earnings pay-offs far into the future. It doesn’t need capital. It struggles to get to cash neutral! Therefore it’s cost of capital is fairly bullet proof for teh foreseeable future. QuantumScape, which doesn’t even pretend to have a product to sell until 2027 is a long duration equity. If rates to rise above equilibrium levels because I and Jay Powell are wrong about inflation, QS will be crushed and should but, even then, Apple should not. 2. I and Jay Powell are not wrong about inflation. Rates will not settle above a level from which Apple can’t continue to prosper. Rates can overshoot to a 2% 10-year in the short term but, I expect equilibrium is lower than 12 months ago becaus ewe still are not out of this pandemic-driven curb on GDP growth. Later this year, that could change and then equilibrium might get closer to 2%.

        3
        February 23, 2021
      • Tommo_UK said:
        @Mark yep, what you said..

        1
        February 23, 2021
  4. Gregg Thurman said:
    With current premarket prints AAPL is down ~15% from its high of just 3+ weeks ago. Historically the period JAN earnings to APR earnings is AAPL’s best of the year. Throw in absolute blowout December quarter results, failing Game Stop and AMC equities going up, and you have complete market insanity.

    I’ll bet Hall is rubbing his hands together in glee.

    4
    February 23, 2021
  5. Fred Stein said:
    On Feb 9, Apple borrowed $14B at very very low rates. Now they can buyback more shares at the current low price for AAPL.

    Ignore the noise, the rumors, the over-worked mining of historical data – all have no predictive value.

    AAPL will go back up.

    4
    February 23, 2021
    • Dan Scropos said:
      I completely agree, Fred. While they have the money to repurchase shares and will continue to do so, we’re almost at a point where I see Tim Cook stepping out to defend the company to some degree, as he has in the past. That could come as early as today. Regardless, I now expect a minimum of 200 million shares repurchased this quarter.

      The continued scarcity of Apple shares will provide even more price stability long after this rotation is over. Put simply, winners are being punished right now. That’s a heck of a lot worse for other companies. Apple has a mountain of cash to deploy, so this is a lot easier for her shareholders.

      3
      February 23, 2021
      • Gregg Thurman said:
        even more price stability long

        How many times have I heard that refrain? Let me count the ways. Today’s intraday low (so far) has been $118.38 (down 18.40% from Jan 25 intraday high), a low not seen since November 30, 2020. Apple’s record December quarter and very strong future prospects are being completely discounted in favor of what? Nothing rational I can tell you.

        Until Apple goes private there will always remain instability in AAPL, that’s just the way an irrational market behaves.

        2
        February 23, 2021
        • Alan Birnbaum said:
          ‘ Priced like an old steel mill going under’ /s

          1
          February 23, 2021
        • Dan Scropos said:
          All fair points, Gregg. But perhaps today’s 18% drop is yesterday’s 40% drop? I have to believe the rush for the exits would be greatly exacerbated if Apple still had 6.6 billion shares, or whatever that is adjusted for splits.

          0
          February 23, 2021
      • At least Apple has a deep war chest to buy back shares. Buybacks, logistics and product/service development is how I expect Apple management to hold down the fort. It’s suddenly a bear market out there. Hedge funds desperately needed this, predators always.

        2
        February 23, 2021
  6. David Baraff said:
    Yawn. Wake me up when this reverses and we get back to the 140’s.

    5
    February 23, 2021
  7. An example of how the market is not running on facts: Raytheon (RTX) the maker of the Pratt & Whitney engine that blew up over CO, has so far taken no recent hit to shares. 128 777s with P&W engines grounded. BA took the hit. Remember when Samsung phones started catching fire?

    3
    February 23, 2021
  8. Gregg Thurman said:
    Could today be “Capitulation Day”? AAPL is currently UP nearly $6.00 since bottoming at $118.39.

    3
    February 23, 2021
    • I call these Apple gyrations a ‘week-in-a-day.’ I’ve also seen what I call a ‘month-in-a-day.’ Grabbed a few more shares at $119.50. Almost cut my hand doing it! $120 being a personal floor.

      3
      February 23, 2021
  9. Tommo_UK said:
    Hey let’s be grateful there haven’t been any hairline cracks discovered in the new iPhone casing,

    I remember being in AAPL when the G4 cube casing crack debacle hit the earnings guidance (was it Q3 or Q4 2000?) and the stock collapsed 50% in AH trading. Now that one was a shocker.

    This is just Apple being tossed about on the seas of idiocy, greed and the worst behaviour on Wall Street and “investors and analysts” talking their books up by preying on the ignorance of a lot of new inexperienced traders (or “canon fodder, more accurately).

    The ones going on about inflation, the reflation trade, and rotation are the most disingenuous and stand out a mile. CNBC has given way too. much airtime to them.

    The fall is annoying considering the dross being sold to and bought by morons who thought “the only was is up, baby,” having mastered the art of pressing buy in an ever rising market since being stuck with only their phones, Robin Hood and pornhub for company since Covid hit and now having to ask how to sell right before they receive a margin call and get liquidated. CEOs like Musk need to stay out of the market. He and his ilk now collectively wield so much power over market that with a single tweet they can make or break no just their own, but other companies stocks or even whole markets.

    The markets and trading need wholesale reform. A bit like the US electoral system they’re just not fit for purpose any more.

    4
    February 23, 2021
  10. Tommo_UK said:
    Having said that, looking at the plunge and recovery today we may have just witnessed” peak stupidity.

    With the vaccine rolling out and people not feeling so shamed for not socially distancing, millennials can hook up on Tinder and Grindr again and go back to using their phones to send pictures of their nether regions to each other again; these are mostly people who think Bollinger Bands are some form of S&M sexual bondage toy after all.

    1
    February 23, 2021
  11. Steven Philips said:
    Tommo: Is that where the Bollinger Brut(e)’s come in? 🙂

    0
    February 23, 2021

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