Apple Inc.: Sell AAPL Stock on This Ugly iPhone News

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Apple Inc. (NASDAQ:AAPL) has a long list of innovative products under its belt, and AAPL stock has made many investors rich as a result. From the first mass-market digital music player in the iPod to the first tablet in the iPad to its iconic iPhone smartphone, Apple is at the core of consumer electronics in the 21st century.

Apple AAPL stock

However, it’s undeniable that the days of bold new products are mostly behind Apple Inc., and that the high growth of AAPL stock in the mid-2000s is now a thing of the past.

This is evidenced not just by the first-ever decline in iPhone sales this year, as well as the fact that AAPL stock is down 7% in the past 12 months versus a 4% gain for the S&P 500 in the same period.

Of course, the bulls will point to a recent surge in Apple stock since the spring lows and news such as a (reportedly) waterproof iPhone 7 or hopes of a new iPad Pro as a sign that the king of consumer tech isn’t done improving its hardware.

But while Apple isn’t going bankrupt anytime soon, it’s worth noting serious pressures on AAPL stock as it looks to defend its market share — and its bottom line.

iPhone Sales Are Key to AAPL Stock

Defenders of AAPL stock contend that reaching a plateau in iPhone sales in 2016 isn’t the end of the company. However, it’s crucial to understand the importance of the smartphone in regards to the whole of Apple.

In short, iPhone sales are the lion’s share of Apple Inc.’s business.

Consider that in the three months ending in June, Apple earnings showed iPhones made up 56% of the company’s top line. With numbers like like that, you can’t afford to have a backslide on iPhone sales.

There are high hopes for the iPhone 7, but research firm Gartner recently published a rather disturbing report that shows competitor Samsung (OTCMKTS:SSNLF) is taking advantage of Apple’s slowing momentum to gobble up share.

Specifically, even as global smartphone sales rose 4.3% in Q2, Apple saw a 7.7% decline in volume. Worse, it has seen its total market share slip significantly form 14.6% to just 12.9% year-over-year according to Gartner, even as Samsung has gone from 21.8% to 22.3% share.

We can chalk this up to the upgrade cycle and anticipation of the iPhone 7 if you want. However, the fact remains that there isn’t much room for error at AAPL given the importance of its flagship smartphone to total sales and profits.

Apple Is Far From a Buy

No, Apple Inc. isn’t going bankrupt. And yes, with a 2.1% dividend and forward price-to-earnings ratio of less than 13, there are far worse investments out there than Apple.

But that doesn’t make AAPL stock a buy. If anything, I would consider taking your profits off the table and waiting out this tech giant right now. Because if recent iPhone numbers are any indicator, the iPhone 7 launch may not be enough to satisfy Wall Street later this year.

Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/08/aapl-stock-iphone-sales-apple-inc/.

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