Apple’s Stock Extends Its Losing Streak

Photo of author

By Jacob Maslow

apple store in shanghaiI can’t say I’m surprised that Apple’s stock continues to sink. After all, how do you follow up on such a massive hit as the Apple iPhone 6? Sure, there was a lot of hype regarding the Apple Watch. But let’s get real here. Even if the Apple Watch was a home run, at best, it would contribute only less than 5% to Apple’s gigantic profits. It is a drop in the bucket. It really should be no surprise that Apple (NASDAQ:AAPL) stock is essentially looking for direction.

While it hasn’t really crashed for 2015, it is obvious that Apple shareholders are looking for a long-term direction for this stock. This is the problem that many companies who post a solid quarterly profit face. This is especially true if you post really solid profits. The problem with success is that you can reach such a high point that there is really only one direction to go, which is down.

Apple is under a lot of pressure to justify its mammoth market valuation. While outspoken investors like Carl Icahn have said that Apple is worth more than $1 trillion, the reality is that the company is having a tough go at justifying that market valuation. I suspect that Apple’s stock will continue to sink precisely due to the fact that it can’t roll out an iPhone 6 every single year. The big deal about the iPhone 6 was that it was a tremendous change in form factor from the iPhone 5. The iPhone 5 was a smaller model and the iPhone 6 was simply Apple’s surrender to market trends that favored a phablet form factor. Unless Apple is going to dramatically reinvent the iPhone every single year, it is very difficult to see a situation where Apple will generate the same amount of profits as it did last quarter. With all these as background, expect Apple’s stock to continue to erode. While it is still up 12% in 2015, I don’t think this is sustainable in the long run.

Images Courtesy of DepositPhotos

Comments are closed.