Apple stock is rocking the news today for two conjoining reasons, the first one being that Apple made the largest move it has made in months, tumbling 2.48% on trading day July 8th. American stocks have been having a hard time eking out earnings due to the constant waves of bad news from Europe, the Chinese stock market meltdown, and indecisive US job market figures. The Dow Jones Industrial Average is down 2.19% over the last 6 months and 2.47% in the last 3 months.
But what has people talking is the specific price Apple closed at yesterday. Starting at $125.69 per share it sank $3.12 to $122.57. Apple has been trading between a band of $123 and its all time high of $133 for over 3 months now. The $123 floor was a key support level; one that most pundits believed would not be tapped before the resistance level was. As early as July 7th, The Street published an incredibly bullish article, reminding readers of Apple’s supreme earnings growth of 40.36% and growing Return of Equity rates.
Yesterday, the piece of news that broke Apple’s support level was concrete figures showing a 90% collapse in Apple Watch sales. Clearly, a flailing new product is noteworthy and an important development for investors to factor into their reference or target price for any goods producing company. This logic is totally evident in Google searches, Market Watch headlines, and Apple news content- people have a thirst for speculation and figures surrounding the Apple Watch. But people seem to be missing other, more important information. Apples other little product, the iPhone, is enjoying record sales, causing Apple to rush its suppliers for more phones. Considering Apple draws infinitely more revenues and grandeur from its signature iPhone, this news should be totally and utterly eclipsing iPhone watch sales news. But that’s not how pundits or opinion makers operate. It is highly possible that Apple Watch news is factored too heavily into Apple share price, and that Apple’s support level will be left in tact. To support this theory, the common wisdom before pundits started causing panic over Apple was that unique app development and consumer generated content was going to drive Watch Sales, and that success for Apple’s new product was travelling on a more long-term trajectory. Hopefully, investors will cease their panic and come back to realize that Apple is a magnificent company with an overwhelming amount of great traits and products, a glorious quarterly report, and a great stock to buy for a vast array of portfolios.