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3 Key Points for Apple Stock Investors Today


Apr. 17 2020, Published 7:33 a.m. ET

Apple (NASDAQ:AAPL) stock continues to recover from the COVID-19 sell-off. The stock rose 0.79% on Thursday and closed at $286.69. So far, the stock has risen about 13% in April. The stock fell by about 7.0% in March and 12% in February.

Apple makes its hardware products like the iPhone in China, where COVID-19 started and killed thousands of people. As the disease spread to other countries, especially the US and Europe where Apple generates most of its revenue, investors dumped the stock. Investors were concerned that the pandemic would destroy the company’s business.

However, countries like China and South Korea have largely got COVID-19 under control. Also, Apple launched a budget iPhone SEO for the pandemic-challenged market. Investors see hope and continue to return to Apple stock.

Here are three things Apple investors need to know right now.

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Apple stock can survive the COVID-19 pandemic

Apple has weathered strong storms before. The company bounced back strongly after the 2008 recession. Apple also emerged strongly from the brink of bankruptcy in the 1990s. While the stock and business have taken a beating from the COVID-19 pandemic, CEO Tim Cook is confident that the company will survive the crisis, according to Bloomberg citing Apple’s internal meeting.

Cook thinks that Apple’s strong balance sheet will help it survive the storm. Apple finished 2019 with $99 billion in net cash. Many companies have been struggling to shore up their liquidity amid the pandemic. However, Apple has a massive war chest to ride out COVID-19 without having to borrow and seek a government bailout.

Apple had been using its cash reserve to repurchase its shares and pay dividends. The company’s stock repurchase program returned $20 billion to shareholders in the December quarter. Including dividends, Apple returned $25 billion to shareholders that quarter. Share repurchase programs can always be paused like Disney and Comcast did.

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Expanding accessories business with a premium headphone

Apple is building a high-end wireless headphone to expand its accessories business, according to Bloomberg. The company aims to launch the new product later this year. There’s a $15.8 billion revenue opportunity in the earphones and headphones market.

Currently, the stock tends to track the performance of the company’s iPhone business. Therefore, expanding the accessories business should help diversify the company’s revenue source beyond the iPhone.

Apple starts reopening stores

Apple has started reopening its retail stores. The company’s only store in South Korea will reopen on April 18, according to Reuters. The company closed most of its stores last month to curb the spread of COVID-19.

Overall, store closings denied Apple some demand opportunities. The timing of reopening stores could be great. The company just launched the cheap iPhone SE that goes on sale next week. Apple will count on the 2020 iPhone SE to drive its sales in the pandemic-hit global market.

Apple stock at a discount

Finally, while Apple stock continues to recover from the pandemic, investors can still purchase it at nearly a 13% discount to its 52-week peak.


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