Steer Clear of Apple Stock: AAPL Is Cheap for a Reason as Problems Mount

Stocks to sell

Could Apple (NASDAQ:AAPL) get kicked out of the elite “Magnificent Seven” club this year? Apple is no longer a market darling. We’ve assigned a “D” grade to Apple stock due to company problems.

Apple is a reputable brand that has delivered shareholder value. AAPL stock has been underperforming in 2024 compared to other “Mag-7” stocks. Apple’s current situation is not as “magnificent” as it seems, feel free to explore other technology firms.

Apple Stock’s Poor First-Quarter Performance

Large-cap technology stocks generally did well in this year’s first quarter. Yet, Apple stock declined 7.63% in 2024’s first three months.

Does this mean there’s a terrific buying opportunity with AAPL stock? Not necessarily. Apple is having issues in China, and this could help to explain why the market is losing confidence in Apple.

Here’s a startling statistic about Apple. Believe it or not, iPhone shipments plummeted by approximately 33% year over year in February. This is important, as $72.6 billion of Apple’s $383.3 billion in 2023 total revenue came from China sales.

China is crucial to Apple, but the company appears to be having trouble selling its smartphones there. Reportedly, in the first six weeks of 2024, iPhone sales declined 24% YOY.

If Apple isn’t able to solve this problem soon, there could be implications for the company’s top-line and bottom-line results.

Apple vs. the U.S. Government

Even for a giant company like Apple, waging a battle against the U.S. government is a gargantuan task. Yet, Apple is evidently embroiled in a headline-grabbing lawsuit brought by a powerful government entity.

Here’s the lowdown. As Yahoo! Finance reported recently, the U.S. Justice Department has filed a lawsuit against Apple based on antitrust allegations.

Attorney General Merrick Garland accused Apple of maintaining “its power not because of its superiority, but because of its unlawful exclusionary behavior.”

The idea behind the lawsuit is that allegation that Apple makes it practically impossible for competitors’ apps and devices to succeed. However, Apple has reportedly vowed to fight the Justice Department’s antitrust lawsuit.

Is it a good move for Apple to push back against U.S. regulators? Only time will tell, but it’s almost a certainty that Apple will have to expend time, effort and capital to fight this lawsuit. Plus, Apple may sustain reputational damage along the way.

Avoid Apple Stock as It’s ‘Cheap for a Reason’

This year so far, AAPL stock has been stuck in a rut even while some other technology stock have raced ahead. Meanwhile, Apple’s iPhone-delivery slowdown in China is a major cause for concern.

Meanwhile, Apple’s battle with U.S. antitrust regulators could be protracted and costly. Therefore, Apple stock isn’t necessarily a bargain just because it’s down; we’re calling it “cheap for a reason” and giving the stock a not-so-magnificent “D” grade today.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

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