If you bought Apple stock a year ago - thinking that the iPhone 6, iPhone 6s and iPhone 7 product cycle would be huge - then you have our commiserations: AAPL has collapsed 26% since its high around $123 a share back in July 2015.
Today, AAPL lost another 2% in trading overnight.
It's a disaster for the stock, which currently looks like this:
Yahoo
Investors are worrying about four things:
- A steady drumbeat of analyst reports that suggest Apple is cutting production of iPhone.
- Apple may have sold fewer iPhone units this quarter than the year before, for the first time ever.
- Apple may be looking at an especially soft upcoming quarter for iPhone sales.
- Apple may sell fewer iPhone units for all of fiscal 2016 - another unprecedented decline.
Already, we're starting to see the first few tech bloggers daring to ask, what's wrong with Apple? Why hasn't the Apple Watch been a big hit? Why have Apple Music and Apple News been so meh? It's one thing for sales of iPod and Macs to decline. But a decline in sales of iPhone? The iPhone is the Sun in the Apple solar system. The entire company revolves around it.
That's why the stock is heading down.
Remember what happened last time ...
We have seen this before, back in 2012. Apple stock fell by 40% in six months. It was brutal. People jokingly started referring to "AAPL" as "CRAAPL." At the time, people were asking the same questions. iPhone 5 had been a huge hit, but when iPhone 5s launched it was underwhelming. It was basically/kinda the same phone. If you bought iPhone 5, you really didn't need to upgrade to iPhone 5s. You just weren't missing much.
That was reflected in sales, which went through the infamous iPhone 5s sales trough. The iPhone 5 created a "super-cycle" of high sales that made the 5s sales look weak by comparison. iPhone 6 has probably done the same. You can already see the iPhone 6s sales trough forming in this chart from BI Intelligence:
BI Intelligence
We all know what happened next.
Apple launched iPhone 6 in late 2014. New size, new features, and a real improvement over previous models.
Here's what that did to the stock:
Yahoo
Now consider the position of Apple CEO Tim Cook. What are the chances that he is going to sit around twiddling his thumbs while iPhone goes into decline?
Zero.
iPhone 7 is around the corner. That could be huge, especially for everyone who bought iPhone 6 and is now due for a two-year upgrade. Apple Watch 2 is around the corner. It's bound to get thinner and better. There's probably going to be an update to the mini-iPhone, too (iPhone 6c).
So it looks like we're simply in another trough cycle before AAPL makes another one of its periodic leaps upward. CRAAPL might actually be a good buy right now.