BUY Apple (AAPL)
The fact that Apple's business will face many difficulties in 2023 is probably the most logical explanation for the stock's drop. However, in retrospect, it seems evident that the epidemic increased the demand for consumer electronics.
Apple's growth is slowing down, and there are many reasons why this trend can continue in fiscal 2023. First, higher interest rates make spending money on discretionary items harder. Additionally, purchasing new Apple goods is a discretionary expense, even though you might argue that many of the company's services and the upkeep of its current gadgets are total costs.
Source: Photo by Arnel Hasanovic on Unsplash
Additionally, $AAPL international sales lose value when converted to U.S. dollars due to the strong U.S. dollar compared to other currencies. China's slowing development negatively impacts Apple's capacity to produce and market its goods and production issues brought on by the pandemic.
In fiscal 2022, Apple will face challenging year-over-year comparisons. So naturally, it seems sensible that it didn't record the rapid increase that investors are accustomed to. The difficulties, however, are by no means gone. If the business experiences another year of low growth in its fiscal 2023, investors might stop ready to pay a premium for the stock despite its earnings.
Due to Wall Street's growing unease regarding Apple's reliance on China for its iPhone production, $AAPL shares have fallen 10% in the past month. In its fiscal year 2022, the iPhone generated 52% of the company's revenue. Investors were, therefore, understandably concerned when a rise in COVID-19 cases in China led to new regulations that pressured factory production, mainly the factory that produces around 70% of all iPhones.
Apple's response was to take steps to leave China entirely and produce some of its iPhone 14s in India. With J.P. Morgan analysts predicting that Apple will transfer approximately 25% of all of its products by the end of the year, the business has been remarkably eager to change its production line as soon as feasible.
Apple will have a challenging year, but these are temporary headwinds for the firm. Due to its expanding ecosystem, Apple has built a solid brand with strong pricing power and an increasing consumer band. As a result, the pullback offers a fantastic entry point for long-term investors.
Source: Yahoo Finance