At the end of July, Apple stock had reached a record high number for the company. Shares were selling for over $195 a pop. That’s the highest Apple stock has ever sold for in the more than 40 years since the company first went public. But, just one week later, the price had dropped by nearly $20 a share. In the four months since the stock price has continued to drop. By the end of October, Apple stock had reached a price per share it hadn’t seen since May. What’s going on? Why is Apple stock dropping so much? As it turns out, there’s more than one reason behind the drop.
Reasons Behind the Drop in Apple Stock
As is so often the case with the stock market, there’s no one reason behind this concerning drop in Apple stock. From falling revenue to tightening restrictions, and lingering lawsuits to lacking strategy, we can think of four pressing issues under Apple’s roof that might be behind this drop in price per share. Let’s round them up and break them down below.
- Year Founded
- Steve Jobs, Steve Wozniak
- Cupertino, California
- Key People
- Tim Cook (CEO), Jeff Williams (COO)
- Notable Products
- iPhone, iPad, Apple Watch, Apple AirPods, iMac, MacBook
Perhaps the most significant factor driving Apple stock’s recent downward trend is the company’s concerning pattern of decreasing profits. For the past four quarters in a row, Apple’s revenues have steadily been dropping. For the quarter that ended on September 30th of this year, sales had declined 1% year-over-year.
Earnings may be still up, but not enough to satiate stockholders and convince them to hold. Especially troubling is the 5% drop in sales of Apple hardware year-over-year. It’s not a good sign for investors. (Even though revenue from the company’s services has seen some impressive growth of over 15% during the same period of time.)
The iPhone, Mac computers, Apple wearables… all have dropped in sales. With any luck for Apple and its shareholders, the announcement of new iMac desktop computers and MacBook Pros with brand-new Apple silicon — the M3 chip — will turn things around in the next quarter. For now, Apple’s returns continue to dwindle.
They don’t call it big tech for nothing. Silicon Valley is a 275-billion-dollar industry, bringing in more money annually in this one single region than many small countries see all year. Naturally, this size and scope lead to some intermingling between fellow tech companies in the valley. Apple and Google are the epitome of this, for better and — these days — for worse.
If you haven’t seen, the U.S. Department of Justice is currently engaged in a huge antitrust case against Google. The lawsuit claims the search giant made special deals with other tech companies to give its search engine special treatment over other search engines. Unfortunately for Apple, this company has gotten roped into another company’s legal troubles. Apple is collateral damage.
This is not a good sign to bearish investors already concerned about the diminishing returns of Apple stock. If Google ends up having to break these special deals with Apple and the like, it could cost Apple tens of billions in profit a year. Some investors want to sell their shares now before this deal possibly falls through and stock prices potentially plummet further.
While the U.S. Department of Justice might not be going after Apple itself, there are other countries beyond the United States looking to take Apple to court or otherwise limit the tech giant’s control internationally. The European Union, the United Kingdom, China, India… each one of these disputes could be reason enough for a shareholder to jump ship. Together, it looks even worse.
The European Union already hit Apple with a major lawsuit that forced the company to switch to USB-C chargers, but now there’s a new case in the works. (It’s an antitrust case, too.) To make matters worse, the United Kingdom is after the tech company for its batteries. This suit alleges that Apple throttles its phones to cover up faulty batteries.
China is unhappy with how much data Apple collects from its users, and India wants to take Apple to court over additional antitrust violations. Looking at the big picture of all of these lawsuits floating around, it’s not surprising to see bearish investors selling now before anything else surfaces. Legal troubles tend to be one-way tickets to even lower profits.
Another factor driving Apple stock prices down? The company’s lack of definitive AI strategy. In a time when every tech company in Silicon Valley seems to have its own take on generative artificial intelligence, Apple’s version of this popular technology is nowhere to be found. Longtime Apple investors aren’t surprised by this, but newer shareholders might be.
You see, Apple has never been one to hop on a trend without an interesting angle that sets the company’s take apart from the competition. Take their long-awaited foray into augmented and virtual reality, for example. The Apple Vision Pro headset was in the works for years before it was finally made public earlier in 2023. Perhaps Apple has a similar strategy for generative AI.
In the interim, we can expect to see more and more shareholders with eyes on buzzworthy trends and similarly, buzzy investments abandon Apple unless the company makes its AI strategy clear. Meanwhile, bullish investors will likely stay put — and maybe even buy more of these reduced-price shares — with faith that Apple will deliver when it can bring something fresh in the AI space.
How Apple Stock Can Recover
When making investments in big tech, it’s important to look at the big picture. Apple stock may be down compared to where it was at the end of July, but it’s still trading higher than it had ever been prior to the end of December 2021. Zoom out a bit, and it’s clear to see the stock is still on its most major upward trend in company history — up $50 a share from where it was in just January 2023.
For Apple to start reaching new heights again, there are a few things that need to happen. For one, bullish investors need to buy up these discounted shares. (This is practically a given, by the way. Apple stock is still a very hot commodity, even when it dips.) Beyond this, the company must continue to expand its digital service offerings. This is where a lot of its potential profit rests.
Additionally, Apple needs to define its generative AI strategy. With the global artificial intelligence industry expected to grow to two trillion dollars by 2030, the tech company must stake its claim to reap the benefits. Rest assured, Apple will almost certainly recover from this temporary dip. It’s too strong a stock not to rebound.
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