uploads/2019/09/apple-sales.jpg

What Prompted Apple Stock’s Fall Last Week

By

Updated

Last week, Apple stock (AAPL) slipped 0.5% amid subdued investor sentiment. The stock gained 1.83% in the week’s first half to close at $222.77 on Wednesday. However, in the last two days of the week, Apple stock dropped 2.26% from Wednesday’s price and closed at $217.73.

Article continues below advertisement

Apple stock mirrored the overall market sentiment

Apple reflected broader markets—the S&P 500 also fell, by 0.5%, and ended the week at 2,992.07. The technology sector saw significant sell-offs in Netflix (NFLX) and Roku (ROKU), which dampened market sentiment. Looming trade war concerns have also kept investors on tenterhooks, and China’s abrupt cancellation of agricultural farm trips to Montana and Nebraska sent shock waves across the market.

Netflix stock fell sharply after CEO Reed Hastings cautioned that competition for the video-streaming company would pick up significantly in November. Netflix stock fell around 8% last week.

Roku plummeted 19% on Friday after an analyst turned extremely bearish on the stock. Pivotal analyst Jeffrey Wlodarczak initiated coverage of the stock with a “sell” rating at a 12-month price target of $60. The stock closed at $108.05 on Friday.

iPhone 11 launch was the week’s highlight

As for Apple, last week was a happening one. The week started with the company’s EU court date for its $14 billion alleged tax evasion case in Ireland. Since such legal proceedings are usually drawn out, investors weren’t too worried about it. Apple stock closed in positive territory.

Mid-week, Apple announced plans to invest $1 billion in India to set up an iPhone production base in the country. The move is being made to avert US-China trade tensions. However, setting up everything from scratch in a new country will likely be challenging.

Article continues below advertisement

Toward the end of the week, investors’ focus was on the launch of several Apple products announced at its September 10 event. The iPhone 11, Apple Watch 5, and Apple Arcade all hit the shelves on September 20. The investor excitement was palpable, and the products’ reviews were encouraging. Apple analyst Ming-Chi Kuo was so optimistic after the preorder sales that he raised his iPhone sales forecast for this year. Similarly, buyers were impressed by the Apple Watch and mobile gaming service Apple Arcade. The much-awaited iOS13 software upgrade also happened last week.

Apple has been vocal about its displeasure over the ongoing trade war. The company has a vast production base in China, and is looking to shift part of its supply chain out of the country. Negative news on the trade war front usually impacts Apple stock, as was the case last week.

Price target increased, Cramer bullish on Apple

On Friday, Cascend Securities analyst Eric Ross raised his price target for Apple stock to $270 from $260 while maintaining a “buy” rating. He became bullish on the stock amid anticipation of strong iPhone11 sales. On the other hand, CNBC’s Jim Cramer believes Apple and Microsoft (MSFT) could push the Dow higher. Citing technical analyst Dan Fitzpatrick’s chart, Cramer highlighted that Apple stock has climbed above its resistance of $217. The stock’s volumes are also higher than average.

What’s in store for Apple stock?

This week is both the last of the month and Apple’s fiscal year. As the iPhone 11 was launched ten days before the fiscal year’s end, some sales are likely to be reflected in the company’s fourth-quarter earnings. Apple is betting heavily on iPhone sales in the upcoming quarter.

On Friday, the company got tariff exemptions for ten of its 15 requested items. The news could boost its MacBook production and sales.

Apple’s market capitalization is $1 trillion, and the stock is trading 5.58% below its 52-week high. Year-to-date, the stock has surged about 40%, outperforming the broader S&P 500, which has gained 19.3%. Meanwhile, Microsoft climbed 0.7% last week to close at $139.44 on Friday.

Advertisement

More From Market Realist