Apple stock narrowly escapes the red for 2015
Apple's (AAPL) stock dive is starting to get ugly. Investors are now barely clinging onto their gains for the year.
Shares of the gadget maker Wednesday were down as much as 1.5% during the day - which had completely erased the stock's gains for the year. A broad market rally following the Fed's interest-rate hike gave Apple shares a lift - as they ended up 85 cents, or 0.8%, to $111.33. But the damage is done: Apple stock is still off 4% over the past week, down 17% from their high and up just 0.8% for the entire year.
What's dogging the shares? Evidence continues to mount Apple's smartphone sales in the current quarter - and also the following quarter - will be disappointing. That's a major issue for Apple shares given the company gets a majority of its revenue from the device and has ridden the smartphone boom which is now slowing down.
Apple hit with more bad news on iPhones as shares fall again
Apple's stock decline is breathtaking in several regards, in that shares are now:
* Flirting with a decline for the year. Shares of Apple, earlier in the day Wednesday's, had down 1.2% for the year. The late-day bounce put Apple stock barely up for 2015 - 0.8% - but that's hardly reason to celebrate. Apple shares are struggling in stark contrast with a bulk of the big-cap tech stocks that have posted huge gains this year. Netflix (NFLX) and Amazon (AMZN) have both doubled in value in 2015 - while Google parent Alphabet (GOOGL) is up 45%, Facebook (FB) is up 35% and Microsoft (MSFT) is up 19%.
* Lagging the market. It's not a great year for the market at large - the Standard & Poor's 500 is up just 0.8% - but Apple is doing even worse lately. Shares of Apple are down 2.6% over the past month - while the S&P 500 is up 1.1%. This is a major wake-up call as investors who have piled in the popular stock would have been better off simply buying an index fund.
* Breaking $110. Bulls have looked to the $110 price level of Apple as a point of support - but that level melted away early Wednesday - before finding support late in the day. Apple shares are trying to hold $110 a share - and haven't closed below that level since October. The crash in Apple shares pulls the stock further below its 200-day moving average of $121 - which is seen as a bearish sign. Why? That means that on average investors who bought the stock over the past year are now losing money.
* Nearing a bear market. Shares of Apple are now down 17% from their highest point in a year - meaning it's just a few percentage points away from a 20% bear market. Investors have lost $130 billion in wealth from the top.
Some Apple stock diehards might discount all this as just trading noise. But a growing body of evidence shows weakness in iPhone sales - based on signs of demand from companies that make parts that go into the iPhone. Mizuho Securities - one of the brokerage firms that has correctly warned investors of a downturn for months - said Wednesday supply chain measures are pointing to a weaker fourth calendar quarter. Estimates for iPhone shipments for the March quarter, also, are too high, says Abhey Lamba of Mizuho.
Lamba has a price target of $125 a share on the stock, but says even that could be too high. "If demand does not accelerate, there could be a risk to even our below-consensus estimates," Lamba wrote in a note to clients.
Steven Milunovich at UBS says a slowdown in iPhone demand growth is dramatic enough to warrant taking down his 12-month price target on the stock. Milunovich cut his target to $130 from $140 Wednesday - which was already reduced from $150 a share earlier in the year. Demand for iPhones in the December quarter is pointing to 71 million units, down from 75 million units earlier forecasted. Milunovich is also cutting iPhone demand targets for the March quarter 56 million, which is 8.5% below what the company sold in the same period last year.
Apple fails yet again: $123B vanishes
What about Apple Music, Apple Pay and other ballyhooed Apple services? "Other services have a potential to drive some revenue for Apple, we think they will not be able to move the needle or fill the gap created by a slowdown iPhone sales," Lamba says. "Apple remains largely an iPhone company with stock performance remaining tied to iPhone shipments."
Follow Matt Krantz on Twitter @mattkrantz