Is Apple about to be 'bitten'?
Updated
Apple is one of the companies whose stock price is overvalued, and the company is facing several severe issues:
1. Big tech layoffs. If US tech is doing quite poorly and companies are laying off people, they probably won't buy new equipment or software. The fired tech workers probably won't be buying stuff for themselves either, and neither will those that see their colleagues fired.
2. Apple's production in China faces significant problems due to lockdowns or because the 'employees' are revolting. These disruptions hurt the reliability of Apple, as well as its image. Unfortunately, many employees are working and living in awful conditions, which is being exposed. Many ESG funds that hold Apple could end up having to dump their shares based on these concerns.
3. Some US politicians are increasingly worried about the connections between Apple and the CCP. With Apple 'threatening' to remove Twitter from its Appstore while supporting the CCP in an era where tensions between US and China aren't great, we could see Apple face more pressure to move away from China. That could increase their costs significantly while also disrupting production even further.
4. As retail consumers are affected by inflation and high-interest rates, they will spend less on buying new stuff, and many devices/apps aren't necessary. At the same time, Apple has been raising its prices due to increased costs (of production), which might further incentivize customers not to purchase their products/services. As if these weren't enough, some of its new products aren't that much of an upgrade to the previous versions.
5. As the world is moving closer toward open source and open technologies/marketplaces, the 30% tax on the Apple app store looks worse and worse by the day. Based on the above, the free market and politicians in the US might try to break Apple's monopoly, which could initially lower its revenue.
6. Current Apple valuation is 3.4x that of the entire crypto market (stablecoins excluded). This is just too large.
AAPL is trading below all its major moving averages, has broken its old uptrend, and has plenty of room to move down toward that major gap at 96$. Most major US companies have fallen more than 30% and have filled many significant gaps, yet Apple has not. Therefore it is possible to see the stock price go down to those levels in the next few months.
1. Big tech layoffs. If US tech is doing quite poorly and companies are laying off people, they probably won't buy new equipment or software. The fired tech workers probably won't be buying stuff for themselves either, and neither will those that see their colleagues fired.
2. Apple's production in China faces significant problems due to lockdowns or because the 'employees' are revolting. These disruptions hurt the reliability of Apple, as well as its image. Unfortunately, many employees are working and living in awful conditions, which is being exposed. Many ESG funds that hold Apple could end up having to dump their shares based on these concerns.
3. Some US politicians are increasingly worried about the connections between Apple and the CCP. With Apple 'threatening' to remove Twitter from its Appstore while supporting the CCP in an era where tensions between US and China aren't great, we could see Apple face more pressure to move away from China. That could increase their costs significantly while also disrupting production even further.
4. As retail consumers are affected by inflation and high-interest rates, they will spend less on buying new stuff, and many devices/apps aren't necessary. At the same time, Apple has been raising its prices due to increased costs (of production), which might further incentivize customers not to purchase their products/services. As if these weren't enough, some of its new products aren't that much of an upgrade to the previous versions.
5. As the world is moving closer toward open source and open technologies/marketplaces, the 30% tax on the Apple app store looks worse and worse by the day. Based on the above, the free market and politicians in the US might try to break Apple's monopoly, which could initially lower its revenue.
6. Current Apple valuation is 3.4x that of the entire crypto market (stablecoins excluded). This is just too large.
AAPL is trading below all its major moving averages, has broken its old uptrend, and has plenty of room to move down toward that major gap at 96$. Most major US companies have fallen more than 30% and have filled many significant gaps, yet Apple has not. Therefore it is possible to see the stock price go down to those levels in the next few months.
Note
Apple took a decent hit and underperformed most value stocks since I shared this idea. China lifting Covid restrictions could give Apple a breath of fresh air, and the fact that most US stocks look like they could have a significant bounce from here.The fact that the stock closed above its June low right before the year indicates that sellers might be exhausted and that many might have sold for tax purposes. It's possible to see the stock rally towards 140 and even rally towards 150-155 to sweep all the highs so close to each other, waiting to be broken.
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