Overeager traders might have assumed that Apple (NASDAQ:AAPL) stock would only go up in 2023. Now is the time to be careful, though, as reality dawns on the market and Apple faces unforeseen challenges in the fourth quarter. All in all, I am neutral on AAPL stock and wouldn’t dare to short-sell it, but I’m not buying right now.
Apple is a world-famous manufacturer of smartphones, computers, wearables, and accessories. The company also offers streaming and other services. Apple’s market cap is fairly close to $3 trillion, and the company is one of the “Magnificent Seven” technology titans.
Yet, it’s a mistake to assume that Apple is invincible and unstoppable. I fully understand why AAPL stock might be considered a “forever stock.” Nevertheless, investors should time their entries carefully, and Apple is vulnerable to global economic headwinds just like any other company is.
Apple’s Epic Run Comes to a Standstill
Apple stock is one of the Magnificent Seven stocks that roared ahead earlier this year, but nothing in the financial markets can just go up forever without taking a break. Just look at the chart, and you’ll see that the buyers are exhausted, and Apple’s investors are probably getting frustrated.
Also, Apple doesn’t pay much of a dividend, and the company has an earnings event coming up fairly soon, on November 2. So, maybe Apple stock isn’t such a “magnificent” Buy right now.
Don’t get the wrong idea here. Short-selling Apple shares is almost always a bad idea. Just be aware of Apple’s issues and challenges before making any buying decisions. For example, Apple plans to release a cheaper version of its $3,500 Vision Pro virtual/augmented reality headset.
It might be $2,500, which is still quite expensive and unaffordable for many people. Moreover, if Apple is preparing to offer lower-priced headsets, it’s probably a sign that the company’s pricy headsets didn’t grab enough attention. It just goes to show that even a “magnificent” company like Apple can falter sometimes.
Apple’s Smartphone Sales Might Disappoint Investors
As I mentioned earlier, Apple has an earnings event coming up soon. We don’t know whether the company will report strong global smartphone sales figures or not. That’s important, as iPhone sales are crucial to Apple’s bottom line.
There are already potential signs of trouble, though. According to a Reuters report, data from Counterpoint Research indicates that “the global smartphone market contracted by 8% to its lowest third-quarter level in a decade” due to “subdued demand for major brands” such as Apple.
Furthermore, Apple’s smartphone shipments declined by 8% in the third quarter of 2023. Hence, this is Apple’s problem just as much as any other global smartphone company’s. Plus, Apple is apparently having trouble selling its smartphones in one highly-populated region.
Here’s the rundown. A Bloomberg report states that Apple’s “new iPhone 15 is selling far worse in China than its predecessor.” More specifically, during its first 17 days of availability in China, iPhone 15 sales were down 4.5% compared to iPhone 14 sales.
If Apple can’t sell many of its pricy Vision Pro headsets, and its iPhone sales seem to be slumping in China, the company’s upcoming earnings report might be lackluster or even a big miss. Now, let’s take a look at what analysts expect from Apple stock.
Is Apple Stock a Buy, According to Analysts?
On TipRanks, AAPL comes in as a Moderate Buy based on 20 Buys and nine Hold ratings assigned by analysts in the past three months. The average Apple stock price target is $207.51, implying 16.9% upside potential.
If you’re wondering which analyst you should follow if you want to buy and sell AAPL stock, the most accurate analyst covering the stock (on a one-year timeframe) is Krish Sankar of TD Cowen, with an average return of 47.5% per rating and a 93% success rate. Click on the image below to learn more.
Conclusion: Should You Consider AAPL Stock?
Analysts seem to be moderately optimistic about Apple — but not overwhelmingly so. Surely, they realize that Apple isn’t perfect and has its share of challenges and problems to deal with.
At the very least, investors might choose to wait until Apple discloses its third-quarter financial report before making any decisions. When all is said and done, I still like Apple, but I’m staying neutral on AAPL stock for the time being.
