The Future of Apple Inc. Stock: A Bearish Perspective

Introduction

The last few days have been full of various events and news that have affected Apple Inc. (NASDAQ:AAPL) stock. In this article, I will discuss why I believe the stock will underperform the market in the foreseeable future.

New iPhone Models

Apple recently announced four new iPhone models, set to be available for pre-order on September 15 and shipping on September 22. These models come with upgraded Apple silicon, USB-C connectors, improved camera technology, and the introduction of Dynamic Island. The pricing for the models starts at $799 for the iPhone 15 and 15 Plus, and $999 for the iPhone 15 Pro and Pro Max. These models offer various hardware upgrades and new features.

Pricing Decision

Despite the abundance of new features, Apple has decided not to raise the prices of its products. This decision came as a surprise to analysts at Goldman Sachs. In theory, with the high inflation rates in recent years, the selling prices of manufactured goods like iPhones should have increased. However, companies are trying to contain interest in their brand due to threats to consumer spending. Apple’s pricing decision may impact its margins in the long run.

Risks and Challenges

Apple’s high valuation ignores some risks that investors should consider. The company’s efforts to reduce dependence on China and relocate production capacity may have angered the Communist Party. China has extended a ban on the use of iPhones in sensitive departments, which could indicate potential challenges for Apple in its biggest foreign market. The market’s optimism regarding Apple’s future growth and margins may be overlooking these risks.

Market Outlook

Wall Street is forecasting relatively good business growth for Apple in the coming years. However, it will be difficult for the company to grow its revenue without raising prices. The risk of a market downturn, similar to what happened in 2012, is increasing against the backdrop of existing optimism.

Conclusion

While I believe in the long-term success of Apple’s business model, I think the stock is currently overvalued and faces internal and external risks. The market’s optimism and weak consumer spending lead me to maintain a bearish stance on AAPL. Therefore, I reiterate my tactical sell recommendation on Apple Inc. stock.

Thank you for reading!