Apple Inc. (NASDAQ:AAPL) is an American tech giant, a real heavyweight in the global corporate scene. The company is known for its innovative gadgets, such as the iPhone, iPad, and Macbook, and nifty software, like the iOS operating system.
Apple has recently reported its third-quarter results for fiscal year 2023. Revenue reached a record high of $21 billion, a solid 8.2% rise. Such growth is attributed to more than a billion paid music and TV streaming subscriptions and software sales through the Apple Store. However, it is alarming that the segment's growth rate has taken a bit of a dive: in 2021, they were growing at a whopping 27.3%; in 2022, this number was almost half as significant – 14.2%, and by the end of the first half of 2023 the rate diminished to mere 6.7%. Experts think it might increase to around 14% again, but it's too early.
The company managed to reach the $3 trillion mark of capitalization. Nevertheless, the company's been seeing a drop in its stock price for the second week in a row. This trend got more pronounced with the profit report released on August 3. It got so intense that the trend line broke, and sellers began acting aggressively.
The main factor for the current slide is the decline in the smartphone market, increased competition, especially from Asian companies, and the tightening of antitrust regulation, which has become a priority in the US. Speaking of the smartphone market, we can observe a particular correlation. After the boost triggered by the pandemic, the market had to slow down and saturate itself with new gadgets and tech; people need time to adjust to new systems before they're ready to embrace the next ones. The market has been flooded with options. Therefore, the purchasing power has decreased. After Covid, most smartphone manufacturers tried to regain their pre-pandemic production rates as quickly as possible. Some companies managed it, some didn't, but the market started gaining momentum overall.
Apple is one company that sells the same candy in a different wrapper, presenting it as something revolutionary. Though most know this trick, they still fall for it sometimes. Nevertheless, the sales data hasn’t been significant, and the company is forced to prematurely suspend the production of less popular models, which consequently affects the indicators and revenue. A good example is the Mini lineup models, which posted the worst sales results in the company's history. The global appetite for electronics is weak, which led to a 2.4% drop in iPhone revenue and a 7.3% slump in Mac sales. Still, the number of active Apple devices hit a new high during the June quarter.
However, there are a bunch of investors who still have faith in Apple stock, and here's why. The decline slowed down around the critical support level of $177. This level is a mirror one – previously, it acted as a strong resistance and restrained growth, but after a previous drop and then a surge, the price finally managed to break through it. Thus, a rollback is considered an expected correction, and the level is a zone of interest for major players. Although, most often, after a stop, a slight lateral movement follows to accumulate volumes. The accumulation helps establish a balance between supply and demand. And the presentation of new devices this fall will likely boost things. Roughly speaking, the market froze in anticipation of the following “breakthrough” technologies to keep the growth going.
The probability that the level will give way remains, but in this case, sellers will have to face the historical accumulation that formed back when the group was resistant. If that happens, all eyes would be on it and around the $150 area.
Major players already show confidence in continued growth—for example, Berkshire Hathaway, whose investment portfolio includes Apple stocks worth $177.6 billion.
And there's another thing messing with Apple's sales figures: the almighty dollar. You see, a good chunk of their revenue comes from abroad. Apple’s CEO, Tim Cook, and its CFO, Luca Maestri, have mentioned that if the US currency exchange rate doesn’t change, their sales should still show some year-on-year growth.
From all of the above, the chances of the shares continuing to drop are notably lower than the continuation of growth after a rebound from the current support. The stability in the reported figures and the upcoming presentation of new devices hold critical importance in stirring up the market.
In addition, the company plans to continue investing in AI and augmented reality-related developments. The projects that didn't quite hit the mark, like the Apple Vision Pro, haven't been entirely abandoned, and we have yet to see the real revolution. After all, Apple does not give up on its costly projects but squeezes as much as possible out of them.
When you put all these pieces together, it's a strong indication that Apple maintains its status as a leader and one of the most triumphant companies in the realm of technology, nationally and globally. Their achievements owe a great deal to their products and their chosen strategic path.
