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 Friday 13 May 2016

PM Bulletin : Apple

 

 

Apple (AAPL) has been in the news this week but for all the wrong reasons. Yesterday it broke below support around the $92 level on its way to $90 – its lowest level since the summer of 2014. This meant that the company lost its place as the most valuable public company by market capitalisation to Google/Alphabet (GOOG). Apple is currently valued at around $486 billion compared to Alphabet which comes in around $492 billion.
   
The chart below shows the pull-back in Apple’s share price over the last twelve months. Back in April last year the stock was trading over $136 – its all-time high. Of course, this was when a number of major indices were also hitting their all-time highs which make sense as Apple is a constituent of both the S&P500 and the NASDAQ.

PM Bulletin
   
This year, Apple has slumped 14%, more than double the loss for Alphabet stock. As we can see from the chart, a lot of the damage was done at the end of last month after the company’s latest earnings release. The stock has struggled ever since although it appeared to be holding around $92 – its low from back in January when markets were swooning as China went into meltdown for a second time inside six months. 
  
Yesterday’s sell-off (which took it through support, and below its 200-day weighted moving average) was driven by a report showing that the company’s main processor chip supplier, Taiwan Semiconductor Manufacturing Company, is set for a very disappointing second half in 2016. Chip shipments for June-December look set to be down 70-80% on the same period last year. The Taiwanese company is the sole supplier for the chips used in the iPhone 7. The implication is that Apple doesn’t have high hopes for iPhone 7 demand.
      
The technical breakdown in the share price is a big concern. However, many analysts who follow Apple insist that investors should stay calm. They point out that Apple has 800 million users who still need to be serviced, and that while the Apple watch is a bit of a slow-burner, the company can still expand into wearables and virtual reality products. They also point out that on a number of metrics the stock is cheap. We’ll see. But we really need to see the stock regain and hold that $92 level for investor confidence to return.


David : Apple is currently valued at around $486 billion compared to Alphabet which comes in around $492 billion.

Disclaimer:

Spread Co is an execution only service provider. The material on this page is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by Spread Co Ltd or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

 

Posted by David Morrison

Category: PM Bulletin


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