- Apple (AAPL) shares slid to a $142.56 close last week, resulting in Apple losing its crown as the world’s most valuable company.
- The news adds to pessimism about Apple, which has seen its stock lose 25% of its value in 2022.
- Investors should consider buying AAPL stock at this discount, a move that notables like Warren Buffett are making.
Source: Vytautas Kielaitis / Shutterstock.com
Since the smartphone era kicked off in earnest, few technology companies have delivered the performance that Apple (NASDAQ:AAPL) has. From the iPhone’s debut in 2007 to the start of 2022, AAPL stock delivered a nearly 4,000% return. Since 2018 alone, Apple went from being the first publicly traded U.S. company to reach a $1 trillion market cap to the first to hit a $2 trillion market cap, and then in January it was the first to hit a $3 trillion market cap.
That remarkable run began to falter soon after AAPL stock topped $182 on Jan. 3. Since then, it has been a volatile year with shares rising and falling in value. The net trend has been down, though. Last week, shares dropped to a new low for 2022. That market cap has shrunk to $2.28 trillion and Apple lost its crown as the world’s most valuable company to the state oil company Saudi Aramco.
Sceptics see this performance as proof Apple’s best days are behind it. The iPhone has peaked and there’s nowhere to go from here but down. However, many more see the current price of AAPL stock as a buying opportunity. This includes Warren Buffet, who revealed earlier this month that he had snapped up another $600 million in AAPL stock.
AAPL Stock Is Suffering From Sector-Wide Punishment
At this point, AAPL stock is down 25% so far in 2022. One of the key things to remember about the poor performance of Apple is that much of the negative pressure on the company’s shares have the result of macroeconomic forces. Issues like rising interest rates, surging inflation, war in Ukraine, ongoing Covid-19 variant waves and fear of recession. Worries about these issues have hit the stock market in general in 2022. Tech stocks like Apple have been especially hard hit as investors look for more conservative plays.
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For the most part, the drop in AAPL stock is not a reflection of Apple’s performance in 2022. In March, the company set a new record for second quarter earnings and reported all-time record revenue for its Services division. Apple delivered diluted earnings-per-share of $1.52, and upped its dividend to 23 cents per share.
This is not a company that is struggling. The drop in APPL stock value shouldn’t be seen as a reflection of trouble brewing for Apple.
A Few Short-Term Challenges Remain
Apple does face some short-term challenges that have had a material impact on its business. Last fall, Apple’s CEO told analysts that supply chain challenges had constrained the availability of products like new iPad, costing the company an estimated $6 billion in the quarter. This year, Apple has faced Covid-19 breakouts in China that have resulted in its suppliers having to lock down factories. In the latest development, Quanta Computer was forced to suspend production at its Shanghai facilities last week. This latest Covid-19 lockdown is expected to disrupt supply of Apple’s popular MacBook laptops.
Look past the temporary challenges and you see a company with an enviable track record. Yes iPhone sales have peaked, but they still represent a massive business — and one that is not going to fade away any time soon. The company has released other hit products in recent years, including the Apple Watch, AirPods, and the new M1 series Macs. Its Services division has turned into money minting machine. With no hardware sales required, it is now the company’s second-largest revenue generator.
The company is also known to be working on advanced new tech like AR/VR headsets and an Apple car. Any of these projects could turn into the next iPhone in terms of future AAPL stock growth. There is little doubt that over the long term, Apple will continue to deliver.
Should You Buy AAPL Stock?
This year is proving to be test for investors who have no patience for volatility. So if you’re worried that AAPL stock could drop further before it rallies, this may be a time to patiently wait and watch.
However, this Portfolio Grader “B” rated stock is attracting some big investors at these prices. If Warren Buffet is buying at that quantity, that is a good sign. With the proven performance of AAPL stock, it’s no stretch to see Apple retaking that world’s most valuable company crown.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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