Apple’s stock got hit in a big way last week as the company announced it would no longer announce unit sales of iPhones. The announcement was taken as a sign of weakening iPhone demand. An analyst summed it up this way, saying “Apple Reduces Disclosure; Typically Not a Good Sign”. The stock has fallen 10% since the announcement. The more positive view is that Apple wants investors to focus more on its earnings than on its unit sales, as earnings are ultimately what will drive the shares forward.
FINSUM: Apple’s shares often fall on earnings (8 out of the last 15 times), so the company has little to lose by eliminating unit sales. We think this is a smart move, especially as the iPhone transitions to being a highly saturated and mature product.
If you are looking for the canary in the coal mine for the current market turbulence, look no further than a handful of stocks that should show investors where things are headed. Especially for the Dow. The index’s gains this year have largely come from three stocks: Apple, Boeing, and UnitedHealth Group. 16 stocks in the 30-stock index have losses this year, but because of the quirky way the Dow is calculated, some smaller market capitalization companies have much more weight than larger ones (weighting is done by share price not market cap). Accordingly, this trio has outsized importance to the index, and if they fall, the Dow is likely to get badly hurt.
FINSUM: The Dow is quite funky, but this story points out just how vulnerable the whole index looks right now.
Apple is reported to be set unveil some big changes in the coming weeks. In what many see as Apple’s third phase, the company is set to release brand new iPads and watches. If personal computing was phase one, and iPhones were phase two, then phase 3 will be wearables, say analysts. The company has seen sales in those divisions soar recently, and they have slowly stolen wallet share from the iPad’s sales. Accordingly, Apple is putting more resources into wearables, but also debuting a new iPad and trying to redefine its purpose for customers.
FINSUM: The iPad has slowly been shrinking from the limelight at the same time as the Apple Watch and Beats have steadily grown. It is hard for us to imagine that either category will be Apple’s main sales driver in the future.
Apple just crossed the trillion Dollar threshold. Shares have been rising, up over 27% this year, on strong sales figures. Everything seems good, right? Think again, says Barron’s, as it believes the stock could be in for a “clobbering”. The reason why is that Apple’s recent success with the iPhone X may have weakened its prospects for 2019. Because there is a longer and longer timeline between phones that have the dazzle to get customers to actually trade up, currently good iPhone X sales may be sapping demand for 2019, meaning the next few quarter’s earnings might be quite disappointing.
FINSUM: This makes sense to us. Customers only have so much wallet share for smart phones, and the iPhone X took a lot of that this year, which means the next several quarters could be lean.
One of the most famous hedge fund managers just made what seems a bold and countercyclical move. That manager is David Einhorn, and the move is to ditch all tech stocks and buy retail instead. In its most recent quarterly filings, Einhorn’s Greenlight Capital bought shares of Gap, Best Buy, Dollar General, TJX Companies, and Dollar Tree, all while significantly pairing holdings of Apple and Micron Technology.
FINSUM: Retail has had a good run over the last year, but the industry is still facing some major headwinds. We think buying retail now seems like a macro bet that the US economy will stay strong.