No stranger to the spotlight, Apple Inc. (NASDAQ:AAPL) received plenty of attention from consumer tech experts and market analysts. But this time around, the coverage isn’t exactly flattering. Concerns are brewing about whether or not Apple can continue to spark interest for its products. The slowdown in AAPL stock certainly doesn’t help matters.
InvestorPlace’s recent coverage for Apple stock generally skews bullish. However, that doesn’t necessarily mean that the tech giant is out of the woods. Bloomberg cast doubt on the upcoming iPhone 8 when it reported in early June that “Apple isn’t currently planning to support next-generation Gigabit LTE networks.” Essentially, AAPL will be behind its competitors before the green flag drops.
Compounding matters is the ongoing legal battle between Apple and Qualcomm, Inc. (NASDAQ:QCOM). QCOM provides modems for Apple, and is already integrating Gigabit LTE technology. Intel Corporation (NASDAQ:INTC) is another modem provider, and they don’t have any beef with AAPL. However, Intel won’t support the new advancement until next year.
More recently, a rumor from an unnamed source claimed that Apple will delay the iPhone 8 release due to a shortage of OLED displays. The source pegs Samsung Electronics Co Ltd (OTCMKTS:SSNLF), which allegedly cannot keep up with demand. If so, it represents another problem in a long line of troubling headwinds for Apple stock.
Apple faces Fierce Competition
Of course, when you’re dealing with Apple, not everything is bad news. Based on footage of an iPhone 8 dummy model, as well as leaked recordings of its accessories, the new phone will be similar in size to the iPhone 7 but will feature a larger display. Other rumors claim that the 8 will feature wireless charging technology.
But will that be enough to satisfy AAPL stock investors? Here, I side with InvestorPlace’s Luke Lango’s sage advice. He asserts that the core basis for investing in the company is safety. Lango writes, “Apple is a household name with a bunch of institutional support, lots of cash on the balance sheet, tons of cash flow, a much-hyped iPhone set to launch later this year and promising new business growth. It’s hard not to be attracted to AAPL stock in that lighting.”
However, the problem for AAPL stock moving forward is maintaining investor support. As Lango points out, Apple stock benefited last year from Samsung’s exploding devices. Watching a rival competitor literally go down in flames bolstered sales, but this was a temporary tailwind.
Now, Samsung is supremely incentivized to get things right, and will do anything to earn back customer trust. It’s safe to say they’ll go toe-to-toe with Apple with the idea of not taking any prisoners. And this time, it’s AAPL stock under pressure because the iPhone 8 has been anything but smooth.
Finally, any competitor would find enormous difficulty in the smart device sector. Too many choices exist for the consumer today. Even if the iPhone 8 lives up to the hype, so what? A phone is a phone is a phone.
AAPL Stock Slowed by a Lack of Ideas
At this point, I’m concerned that Apple is running out of good ideas. When Steve Jobs was alive, AAPL stock was an investment towards tomorrow’s innovations. Today, it’s about managing expectations.
And if indeed Apple stock is a flight to safety, then I’m not sure if we can continue to call it undervalued. For example, at one time the company’s product launches veritably held the industry hostage.
They’re still very popular today, but the mystique is gone. Bigger screen, cleaner look and faster speeds … except this time, the upcoming iPhone is slower and no longer aesthetically groundbreaking.
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Clearly, Apple’s novelty has worn off. Even if they hit all the right notes this year, the following years will be increasingly difficult. The company no longer captures the consumer imagination that it once did. Until it finds another signature innovation, AAPL stock is a tough buy at these lofty prices.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.
