Apple stock is down over 8% this week, wiping off about $200 billion in value, and dragging down the indexes. Apple is now in a bear market.
Apple has fallen during a bad week for equity markets, which are selling off stocks in nearly every industry on fears of Fed rate hikes, weakening consumer confidence, rising inflation, and supply chain challenges around the world. The index is down over 7% so far this week and is on pace for a six week losing streak.
The outlook for Apple's business hasn't changed much this week.
The company has been viewed as a safe place for investors to park their money. It is a bad sign for other stocks and a sign of investor confidence if it is selling off alongside everything else.
In a bear market, there is nowhere to hide, and that includes Apple, according to Jeff DeGraff of Renaissance Macro Research.
It's a better sign that they're starting to take everything when they start taking out the leadership in tech.
Our assumption is that the AAPL selloff will continue, not because we know anything about this quarter, but because we believe that once investors start selling best-of-breed names they are rarely done in one day.
It's a reversal from last November, when growth-heavy tech stocks began to fall and Apple attracted investors who wanted a lower-risk bet on tech.
Apple is able to endure slowdowns and return profits to shareholders because of its large cash flow. In the March quarter, it generated $28 billion in operating cash flow. It spent $27 billion to buy back its own shares and pay dividends.
In the March quarter, every single business of Apple grew except for iPad, which Apple blamed on a chip shortage.
In an earnings call last month, Tim Cook was asked about the effects of macroeconomic conditions and inflation on the company's business, but he said the bigger problem was making enough Apple products to meet global demand.
Cook said that the main focus was on the supply side.
Even if Apple were to start to feel the effects of macroeconomic conditions, it still has a famous brand, premium profit margins, stores in key shopping centers, and a collection of related products and services that appeal to wealthy consumers around the world.
Even if Apple is no longer the most valuable company in the world, it will still generate enormous profits.
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