It seemed like the last we heard from Apple stock was that the company was succeeding overall. The tech giant became the first trillion-dollar company, but recent gains have since been offset by yesterday’s collapse.
Wednesday was the single worst day in Apple’s performance this year. Now, Apple shares sit slightly below their 50-day moving average, which is lightly to get worse.
The DJIA was largely impacted by Wednesday’s market collapse, which includes stock such like AAPL. More importantly, when analyzing the cause of the collapse, its very difficult to pinpoint one single factor which lead to the massive drop-off. This makes the bluechip landscape uninviting to investors right now. Interest rates are rising, not to mention China tariffs being high does not help persuade investors to invest. Large exporters like Tesla are impacted greatly by China tariffs, which also makes these stocks unattractive to investors right now.
It has been seen that the iPhone XS sales have been lackluster in China, with spy chip allegations not helping relations between the U.S and China.
Although, the news regarding interest rate hikes has been known for months. We have seen interest rates increase steadily since election day 2016. So if the markets already knew about rising interest rates, why did the markets still collapse?
Why Did The Market Collapse?
The markets thrive off stability and long-term predictability. The current geopolitical landscape is anything but stable and predictable. It doesn’t take much political upset for the market to feel a drop, causing companies like Apple (NASDAQ: AAPL) to take a hit also.
Should You Invest In Apple Shares Right Now?
Apple shareholders and all bluechip investors for that matter should know that investing in Apple right now makes no sense. When compared to a 10-year Treasury note, Apple shares yield 1.4%, the Treasury note yields 3.2%. The Treasury note comes with less volatility.
Another thing to keep in mind with Apple shares is that the company is susceptible to volatility due to iPhone sales. A Bloomberg Businessweek reporthas shown that smartphone sales have declined at a staggering rate in recent months. Because Apple’s main business comes with the iPhone, it is hard to see how the company will separate itself from the competition.
Apple has released a variety of products, ranging from the iMac to the Apple Watch. Despite all of these new Apple products on the market, the iPhone still represents 60% of the company’s entire revenue. The smartphone market is fiercely competitive, meaning that Apple needs to diversify their other products to ensure long-term revenues do not decline.
Investors are beginning to lower their exposure to AAPL stock, due to the current market volatility. This may lead to Apple shares losing their trillion dollar market capitalization.