No matter how terrible a pandemic is, all health-related threats eventually fade away. And that was the piece of good news that came from New York Governor Andrew Cuomo, who announced that staggering death and hospitalization rates have started to stabilize. For consumer-sensitive companies like Apple (NASDAQ:AAPL), this was the catalyst that they needed. Not surprisingly, Apple stock jumped big on the Monday announcement, gaining nearly 9%.
As you know, the iPhone maker shuttered their stores in all markets outside China due to coronavirus fears. While it was the right thing to do in terms of societal health, it will undoubtedly have fiscal consequences. Prior to this global mess, Apple stock was charging higher on positive developments, such as improving relations between the U.S. and China.
Now, the dominant consumer technology giant must wait around like everyone else for the crisis to pass. However, New York – which is now the epicenter of the pandemic – has demonstrated significant improvement, leading to strong investor sentiment.
But is jumping aboard Apple stock now a premature move?
Some Light from the End of the Tunnel for Apple Stock
Although I’m generally hesitant on buying anything with gusto at the current juncture, the enthusiasm toward AAPL isn’t without justification. Closely examining the data, hope is a rational emotion.
Given that New York is the coronavirus epicenter, I compared its cumulative case total with that of select European hotspots (Italy, Spain, France) at their respective onset of major community spread. This translates to an initial starting point between 50 to 80 cases.
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From this chart, you can see that the infection rate for all four regions looked similar between community spread to day 10. At that point, cases in New York took a sharp vertical turn. On day 14 following community spread, the state imposed a mandatory stay-at-home order.
Although Republicans may not like to hear this, Governor Cuomo likely saved his state from incomprehensible disaster. In the three days leading up to the mandatory order, New York’s daily rate of infection averaged a whopping 72.9%. In the following three days, the average dropped to 35.7%. And the three days after that series, the average declined even further to 20.3%.
Let’s give credit where it’s due: Cuomo, along with countless thousands of the Empire State’s brave medical professionals and first responders, saved New York.
Frankly, this is the kind of leadership that America needs. I’m sure Wall Street took notice, translating to a huge move in Apple stock.
Don’t Celebrate Too Soon
At the same time, Governor Cuomo was adamant about making one point clear. If New Yorkers didn’t stay vigilant regarding sheltering in place, all the good work that the state collectively accomplished could go to waste.
Again, I’ve got to credit the governor here: he’s making great sense because New York is an unusual case. When I say unusual, I’m speaking in a negative or at least worrying context.
Using data from the state’s Department of Health, I was able to analyze the ratio between total persons tested and positive hits for Covid-19. What concerns me is that, generally speaking, as the stated tested more people, the ratio of Covid-19 cases has increased. Unfortunately, we’re talking about very large percentages.
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For example, between March 5 and March 20, the ratio of positive hits to total test cases averaged 16.5%. From March 21 through the end of the month, the ratio spiked to 41.9%. From April 1 through April 5, the averaged again jumped to 47%.
In other words, close to half of those who suspect they have Covid-19 are indeed positive for the disease. It goes to show you that any lack of discipline here could quickly harm New York’s delicate recovery. Obviously, that wouldn’t help the cause for Apple stock.
To Buy or Not to Buy?
Based on all the numbers we just discussed, should you buy Apple stock today? If you’re truly anxious on getting your hands on this discount, acquire a small position. For everyone else, I think you’ll see even better deals in the months ahead.
Even if national coronavirus cases flatlined tomorrow, we still have a very difficult recovery process ahead. During the first week after Covid-19 started significantly impacting our economy, 3.3 million Americans filed for unemployment benefits. By the following week, 6.6 million workers joined their ranks.
Who knows what kind of numbers we’ll see next? More critically, you can’t just turn on the economy after such a grueling hard stop.
Plus, who’s going to buy expensive electronic gadgets in this environment? With so much national and global uncertainty, Americans will be intuitively inspired to save money. Therefore, I don’t see a reason to buy Apple stock with any urgency.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. As of this writing, he did not hold a position in any of the aforementioned securities.
