Apple's Stock Falls Below Key Support: Crisis or Temporary Pullback?
After reaching a historic closing high in its stock price in December last year, $Apple(AAPL.US$ has seen a nearly 12% decline this year, erasing over $300 billion in market capitalization.
Some analysts with a pessimistic view believe that the stock, which did not maintain the support level of $180 last week and dipped below $170 during different times on Tuesday, might indicate a potential retracement to its October low of $165.67 if it continues to break through and stay below that threshold, as per Todd Sohn, Managing Director of ETF and Technical Strategy at Strategas Securities.
Will Apple face a continuous decline?
From a fundamental perspective, Apple is confronted with a series of concerns, including slow progress in AI development and declining smartphone sales in China.
Competition from Foldable Phones and Generative AI Smartphones
According to a report by the American technology news outlet The Information, Apple is currently developing two prototypes of foldable iPhones. However, mass production of these innovative devices is not anticipated until at least 2026.
Last summer, Apple's CEO Tim Cook stated that Apple aims to run generative AI on its devices, allowing AI functions to work directly on the phones without relying on cloud services. Achieving this requires the miniaturization of AI language models and the creation of more advanced processors.
However, other manufacturers, including Samsung and Google, have released devices with onboard generative AI features, outpacing Apple. Barton Crockett of Rosenblatt Securities has stated that it is currently unclear how Apple plans to utilize AI.
Apple Confronts Competition from Huawei-Led Mobile Industry in China
Apple is contending with fierce rivalry from a revitalized Huawei in the premium segment, and concurrently, it's experiencing pressure in the mid-range market due to the bold pricing tactics of firms such as OPPO, Vivo, and Xiaomi. Huawei is successfully capturing and fulfilling considerable market demand with its Mate 60 series, standing out as one of the bright spots. On the contrary, the iPhone 15 does not feature significant upgrades compared to its predecessors; hence consumers feel quite content holding onto their older generation iPhones for the time being.
Apple is experiencing a shipment decline in China, with iPhone assembler Foxconn reporting an 18% sales drop in early 2023. This is significant as iPhone sales comprise over half of Apple's revenue. Counterpoint Research further notes a 24% fall in Apple's sales due to strong competition and a high sales baseline in January 2023.
Naturally, short sellers have swarmed in. According to data from analytics firm S3 Partners, Apple was the stock market's second-most profitable short position in February, with a paper gain of $606 million.
Analysts Split on Apple's Trend After Key Support Break
Some analysts have differing views on the current trend. Katie Stockton, the founder of Fairlead Strategies and a market technician, notes that Apple's stock has fallen below the support range of $179 to $180, suggesting a bearish pattern in the near term. However, she maintains that support levels are thresholds where investors consider a stock to be attractively priced due to being undervalued, which leads them to buy shares after the price has recently decreased.
Source: Barron's, Financial Times, Bloomberg, Counterpoint
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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103979298 : is a decline
chainingten : yes, apple's declining.... what's good and new about apple? the vision pro is overpriced, doesn't sell, and has no Killer software ..... overall Apple sales are down 24% and the company is getting fines left and right.....
73419717 : Need new leadership with innovation needed. Selling a recycled titanium iPhone last fall was the pits. That’s all ya got?