Apple heads into a crucial earnings report on Tuesday following a three-month slide that has shaved about 33 percent off the tech giant’s share price. Since those Oct. 3 highs, a series of disappointing iPhone sales numbers, geopolitical worries, and a lowered revenue outlook to begin 2019 have shaken some investors’ faith in the once-indomitable tech behemoth.
Three experts weigh in on how to play Tuesday’s numbers:
· Tengler Wealth Management’s chief investment strategist, Nancy Tengler, says Apple is about to find its support level, which means that help could be on the way. “Right now I think you buy it cautiously. You don’t buy your entire position, you ease in over time, you wait for that dividend increase to boost things further, stock buybacks,” says Tengler. “Other investors will step in as it’s clear, as the transparency comes through as to how Apple’s going to manage this change.” According to Tengler, that change could look a lot like what Netflix has built its recent success around. “I think they just might take a page out of Netflix’s book, and build in subscription services with hardware purchases, and I think that may solve some of the slowdown in hardware purchase.”
· Steve Grasso, director of institutional sales at Stuart Frankel, leans quite a bit more toward the bearish side of expectations. “Apple was a huge headwind to the overall market, along with [Fed Chairman Jerome] Powell. … The truth is China growth went from 10 percent to cut in half basically, and we don’t really know what that level is, but I’ll tell you this: It’s not higher than 6 [percent],” says Grasso. Since China is a huge part of Apple’s manufacturing and sales platforms, the continuation of worrying signs coming out of what has been a high-growth economy in recent history does not bode well for Tim Cook’s company. “Headwinds are extreme, and Apple’s headwinds are probably more than most,” says Grasso.
· Palisade Capital Management CIO Dan Veru says that, in a huge week for tech earnings, Apple is the name to watch. “It’s got to be all about Apple, because that’s going to set the tone for all of technology, the entire ecosystem, the entire supply chain. You’ve had a huge rally back in the semiconductor space, which is very interesting to me. … That sector was the first sector where we saw weakness in early summer. That’s where we started to see the decay begin, which metastasized into an early growth scare as we got into the late fall,” explains Veru. But it’s not all doom and gloom. Even though Apple, as a leadership stock, points toward a bearish path forward right now, it could also be a leading indicator of a broader tech turnaround. “I think, similarly, that’s been the area where we’ve seen tremendous leadership. So if we see further evidence that a dominant player like Apple is — at least, certainly the expectations are quite low — it’s really going to be what they say on the guidance.”