After peaking at $137.98 on the strength of a stock split and an overheated tech sector Apple (NASDAQ:AAPL) stock then fell. Now down 22.6% from its high, those who chased the stock at too high a price will wonder when the stock will stop falling.
Algorithmic trading systems will use the 50-day and 20-day moving averages as a guide to pin down the support price. But Apple stock is crossing through those and could head lower. Apple’s watch event was a “sell on the news” moment that failed to excite the market. At a 32.5 times P/E, valuations are close to that of Microsoft (NASDAQ:MSFT) which trades at 34.77 times.
Apple relies on both hardware and software for growth. Software and subscription profits will continue rising, while hardware sales could lag. A second wave of the pandemic (an extension and expansion of the first) may threaten device sales. People need internet access on Apple devices but need food and shelter more. Using old devices for now when physical mobility is limited (due to physical restrictions) may hurt device sales.
Apple’s much-needed iPad and watch updates will not move revenue growth by much. The iPhone with 5G event may excite investors again.
For now, wait and see how the technology stock correction plays out.
