Each morning begins the same as the last for Apple (AAPL) CEO Tim Cook. He jumps out of bed at the respectable hour of 5:00 am PST, walks down to his kitchen to prepare his favorite “hot pocket & coffee” breakfast, and makes sure to take out his iPhone and say, “Hey Siri, what’s the weather going to be today?” Siri naturally responds, “the weather in Cupertino will be 68℉ with partly cloudy skies.”
See…just like any other day.
Except, on November 1, Cook announced Apple’s (AAPL) financial results for its fiscal 2018 fourth quarter.
“This year, we shipped our 2 billionth iOS device, celebrated the 10th anniversary off the App Store, and achieved the strongest revenue and earnings in Apple’s history. In fiscal year 2018, our revenue grew by $36.4 billion. That’s the equivalent of a Fortune 100 company in a single year, and we’re capping all that off with our best September ever.”
–Tim Cook, Chief Executive Officer, Apple
No amount of good news from a kind-eyed CEO could reverse the real danger Apple (AAPL) faces as the company heads towards bear-market territory. The word on the Wall Street about bear markets is that they typically occur when a company’s shares decline 20% or more from a bull-market high. Apple’s (AAPL) shares tanked 19.9% on Monday from their record close $232.07 back in October, joining the other FAANG stock members in the market of the bear.
According to CNBC, shares of Facebook Inc. (FB) and Netflix Inc. (NFLX) have remained bearish since the end of July, with Amazon (AMZN) and Google parent Alphabet Inc. (GOOG) joining the party around the same time. For companies like Facebook (FB) and Google (GOOG), the market trends are understandable. Mark Zuckerberg’s social platform has faced a difficult couple of years trying to make the world forget that his company might have enabled Russian hackers to influence voters in the 2016 US Presidential Election, not to mention data breaches that have resulted in millions of user data being compromised.
Just south of Facebook’s (FB) Menlo Park sits the world’s most-used search engine in Mountain View, California. Early in the month of November, thousands of Google (GOOG) employees from twenty different locations around the world left their offices in protest of findings from a New York Times Report that revealed troubling information pertaining to corporate responsibility. Andy Rubin, a former executive of Google (GOOG) and the “father of Android,” was accused and found guilty of sexual misconduct with another employee. Rubin was not fired as a result of his actions. According to the New York Times’ report, Google (GOOG) paid him $90 million to resign and keep his mouth shut.
But what did Apple (AAPL) do to deserve the market pushing the company into bear-territory?
Several analysts in the space believe it may be a response to CEO Tim Cook’s Q4 announcement pertaining to volume disclosures on company products. Cook announced that the company will no longer be reporting unit sales for iPhone, iPad and Mac, from the next quarter, according to sources presented the call. Luca Maestri, Apple’s (AAPL) Chief Financial Officer, explained that the “number of units sold in a quarter is not representative of an underlying state of business,” which, while understandable, still doesn’t translate well to investors trying to figure out how successful Apple’s offerings are for consumers.
Lack of investor clarity results in mistrust and, in the case of the stock market, mistrust pushes investors to sell their stake in said company. Shareholder doubt is not new for Apple (AAPL) as the company has been struggling for some time to stay relevant. While no company can compete with the iPhone, Apple’s streaming music service, Apple Music, has fought an uphill battle because of the company’s “walled-garden approach” which only allows Apple Music to function on Apple (AAPL) products. Spotify (SPOT) and Amazon Music (AMZN) work on Amazon’s and Google’s home speaker products, Apple Music does not.
While many are concerned about the future of Apple (AAPL) in the tech industry, knowing Tim Cook as well as I do, he will simply announce a brand new product that will dazzle and shock the entire universe, and then, maybe then Apple (AAPL) will return to bull-territory once again.
