Apple Inc. Stock Falls Friday, UnderPerforms Market

Among the New Tech Giants, Apple Inc., the one consumer tech giant by market cap, was underperforming the pack.

AAPL stock drops ~2% in early trading today. The company reported more shares sold than added, or a sequential decline in profit and earnings. The question is if this indicates investors still see risk in AAPL and their own concerns over where the company is headed.

One thing is certain, Apple’s results are the first of many earnings reports to be out in the next several weeks. The company now has 38 events in Apple devices, software, and services. The signs are slowly indicating that Apple’s main challenge is to keep a breakneck pace with growth. There is every reason to believe its doing that. But how can the company continue to meet expectations when the stock market is pushing higher?

The current quarter is a great opportunity for company’s like Apple to increase volumes. These numbers are based on how many units ship and what products are typically purchased on a monthly basis. Mobile consumers already have a device and are likely preparing to upgrade or shop for a new one in the next few months.

The share price began to fall in February after initiating slow growth with a slowdown in iPhone revenue. The price then reached a correction before beginning a retracement to the $300 range. Further tailwinds for sales of its devices are always good and expected this year with new models to the App Store and other upgrades. In the near future, it will have to deal with greater trade tensions with China, which could be a challenge.

CNBC reported the most recent fall Friday as stocks were popping as a positive earnings season approached. The stock is still holding up well and even rose toward the close before the sell off began. Volume exploded Thursday with 2.5 billion shares being traded versus the daily average of just 1.7 billion.

I believe AAPL stock will get traction here as we look to 2Q/3Q results. The company is evolving to a juggernaut of sorts that will last for a generation or more. Its reach and cache will be unmatched. What I mean is there is not just iPhone sales, but it is the company’s ability to simultaneously be a watch, application and music seller. Companies like Alphabet and Facebook are currently taking away a ton of share as technology evolves. But it is a long game, and it may be hard for any other competitor to truly displace them.

The market is still underestimating the company. We need to listen to what CEO Tim Cook has to say during the call, see what the strategy is, and what the company’s balance sheet looks like. In the second quarter of 2019, look for the iPhone not to drop due to tax savings, but sales to exceed 13 million units, thanks to the popularity of the all-new iPhone XR. The period will be big for big box store chains. Watch JCPenney, Sears, and Wal-Mart.

AAPL is no company to ignore, as many have realized. In fact, AAPL shares are the best performer of the decade and could be one of the best stories in tech for years to come.

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