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In just a few months, “erased” all the accumulated gain since August 2020. As is known, the markets go up the stairs and go down the elevator.
It is clear that Apple stock is in a downtrend. Therefore, it is not a good idea to buy now. What happens if one already has the action? You must define a maximum loss (by stop loss) and, if the stock reaches that price, it must exit. First of all, capital is preserved.
So is there a recession on the horizon?
The Federal Reserve is raising interest rates at a more aggressive pace to control record inflation. In addition, consumer confidence is in sharp decline, due to the increase in energy and housing prices, which shatters their purchasing power.
Apple is a company that operates in the real economy, so it is closely linked to the global context. Despite having grown enormously in recent years, its situation is at least attention.
A recessive context changes the behavior of consumers. There are consumer staples companies, which will continue to sell their products, since they cannot be eliminated from the budget. For example: food, drinks, hygiene.
In contrast, Apple products, in the event of a recession, could be affected. Why? Simply because they are products that can be postponed since they are not essential.
If one were to look at the last strong recession, in the 2008 crisis, one would conclude that Apple came out of it much stronger. Is that comparison valid? Not in any way. In 2008, Apple was in full swing, due to the new presentation of the iPhone. Instead, the current situation is totally different, since the smartphone market is much more saturated.
It is worth clarifying that 52% of Apple’s sales come from iPhones. And between the iPad and Mac computers they explain 18% of the total. In other words, its main products represent 70% of its turnover. The remaining 30% goes to services (20%) and accessories (10%).
Undoubtedly, the sale of its products would be seriously affected in the event of a strong recession being confirmed. Possibly the services category will remain stronger.
Apple is currently worth 5.8 times its sales, which is a huge adjustment from early 2021, when its valuation was 8.8 times its sales.
If one looks at the average valuation ratios of the last few years, Apple could continue to fall, since it is still “cara”. In addition, comparing it with companies in the field, the conclusion is the same.
Beyond the fact that Apple is a spectacular company, the economic context and the constant rise in the interest rate force caution. The situation can get even more complicated. Be alert.
To finish, I want to invite you to download a free report that I prepared so that you can face this crisis and have the tools to know how to beat the market. I think it will be very useful to you. You can download it at this link: Financial chart – double capital.
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