It’s unclear how shares in Apple (NASDAQ:AAPL) will perform in the short term. On one hand, tech stocks overall have been recovering since the middle of March. In the case of AAPL stock, shares have been able to move back toward what they were trading for at the start of 2022.
On the other hand, both company-related and external factors could put pressure on it in the months ahead. As a result of recent events, the company is cutting production of products like the iPhone SE and AirPods. These same recent events are also increasing the chance of a recession in both the U.S. and Europe.
Increased chances of a recession alone could cause the tech stock rebound to reverse course, sending this company’s shares lower as well.
However, if you’re looking at making Apple a long-term holding, I wouldn’t view these concerns as a deal breaker. These challenges will pass. Furthermore, it has a bevy of potential catalysts in play that stand to send its shares higher over a long timeframe.
Most recently, another one has emerged: The launch of a subscription-based service for its hardware devices. If it comes to fruition, this, like its existing potential catalysts, is something that could help shares continue to perform well in the years ahead.
AAPL Stock and Near-Term Price Direction
As you would expect for such a massive enterprise, Apple has a steady stream of headlines detailing the latest developments with the company. Yet while this stream is a mix of both positive and negative developments, and shares have been bouncing back lately, the latter could again start to outweigh the former.
Why? The issues behind the year-to-date roller coaster ride with AAPL stock (and the market overall) continue to be in play. Supply chain disruptions continue to be making an impact. The company’s heavy dependence on China leaves it vulnerable in many ways. And that’s not just due to recent news of key supplier Foxconn having to shut down a facility due to China’s latest coronavirus outbreak. Rising tensions between the U.S. and China are another reason.
Inflation, and the Federal Reserve’s response to it via interest rate hikes, could affect customer spending. What’s for now an economic slowdown could morph into a recession. As the stock market looks forward, shares could start dropping before a recession officially begins. After making it back near $175 per share, the stock could fall back to around $150 per share. Or perhaps, even lower.
Again, I wouldn’t view this as a reason to avoid Apple. There’s still plenty to support making this a long-term holding.
Apple and the Subscription-Based Hardware Rumors
A lot’s up in the air for AAPL stock in the near-term. But if you have a long time horizon, this isn’t as major a concern. Instead, there’s merit in adding it to your portfolio now, or on further weakness.
Why? Yes, shares could pull back in the months ahead. Yet compared to speculative tech stocks, it stands to hold up much better during a bear market. That’s not all. Beyond just the strong chance it “holds up” during a continued downturn, there’s ample room for it to move higher throughout the 2020s.
There are a multitude of potential catalysts that may help it sustain revenue, earnings and share price growth. For example, the expansion of its services business, or its move into new products like electric vehicles. The hype around the “metaverse” has cooled considerably; that market, if it lives up to expectations, could be an area of growth for Apple’s hardware business.
Atop these potential catalysts, another one has emerged. According to a Bloomberg article published March 24, Apple is supposedly working on the rollout of a hardware subscription service.
With this service, users would basically lease hardware such as iPhones from the company. Assuming they stay subscribers, users could swap old products for new ones. This could help grow sales in its maturing iPhone segment. It would open up the market to customers who want the company’s premium smartphone devices, yet can’t afford to pay for one up front.
Bottom Line on AAPL Stock
Earning a “B” rating in my Portfolio Grader, be patient if you’re bullish on Apple stock. The issues with inflation, interest rates and the global supply chain are still playing out. This could have a negative impact on Apple’s stock price performance, or limit its ability to move to higher prices.
However, once today’s uncertainties pass, numerous catalysts will enable it to continue growing revenue and earnings over time. In turn, this should drive more strong returns for AAPL stock.
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.
