$200 Billion of Apple’s Market Cap has Vaporized
Apple has had their shares plummet recently. The tech giant is down $200 billion in their market cap in less than a week. Falling 1.7%, it is the worse five-day loss since November of 2022. However, with Apple’s size, the market cap drop looks serious, but it is not what it seems. The company is massive so a significant drop like this would scare people away from investing but Apple has one of the largest on-hand reserves of cash and is massive that it can weather the storm. As of June 2023, its reserves are $62.482 billion dollars.
Revenue Failing
The troubles began back on August 3rd when Apple reported that its iPhone sales had fallen short of estimates for the June quarter. Due to this, the company’s overall revenue dropping 1% year-to-year to a total of $81.8 billion dollars.
Apple increased its revenue streams in recent years, adding billions of dollars to its top line. Such streams include the App Store, Apple Mustic and TV, Apple Pay and iCloud services. However, iPhone says still make up an estimate 50% of total revenue brought in. This large revenue share makes the company rely on iPhone sales and a drop hurts their bottom line.
Some analysts have downgraded Apple’s shares. Apple had a stellar “Buy” rating and now it sits at “Neutral”. Other analysts have put a “hold” status for Apple due to their fear of sales not rising throughout the year for iPhone sales.
Apple has had some setbacks in the recent quarter. Mac earnings dropped by 7.3% to $6.8 billion, iPad earnings dropped 19.8% to $5.8 billion and iPhone earnings fell 2.4% to $39.7 billion. The falling revenue from these products has analysts worried. I do believe Apple charges too much for their iPhones and if they want to increase their earnings for the product, they need to cut the price by $400.
Apple’s Valuation
Apple has a rich valuation right now. This is another reason why the stock is under pressure. Even though the tech company has had, three consecutive quarters were revenue fell short; they are still up 51% year-to-date at their peak. Even with a recent drop in price, Apple is still trading at roughly 30 times earnings.
From what I read, some believe Apple’s cost cutting measures and their high-margin services earnings as a reason to pay a premium for the stock. However, from what I read, others are worried that Apple is too confident and reliant on their iPhone sales that this could affect them in the future.
Apple stock still good?
Currently apple is still trading at $179.46. They provide a dividend yield of $0.54 cent and payout $0.24 per quarter. For the average investor this might be a bit on high for price. However, if you want a safe dividend stock then it is a good one to get. Even with recent revenue drops, Apple is still a strong company that will be around for a long time.
