Beyond the Apple Hype: An AAPL Stock Reality Check

Stock Market

Some people believe that Apple (NASDAQ:AAPL) stock will always grind higher and that they should buy immediately all dips. However, while it might be fine to own a few AAPL stock shares, it’s not wise to make any assumptions. A near-term share-price rally isn’t guaranteed, even with a famous company like Apple.

It’s reassuring to know that Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) CEO Warren Buffett has a large share position, but Apple isn’t a problem-free company. The U.S. International Trade Commission is considering a ban on Apple Watch imports. Prospective investors should consider this issue among others. Let’s analyze Apple’s crucial developments and devise a reasonable approach to AAPL stock.

Will Service Price Hikes Help or Hinder AAPL Stock?

There’s so much going on with Apple that it might be hard for investors to keep track of it all. For example, Apple is making a big move into the market for buy now, pay later (BNPL) financial services.

Specifically, Apple just opened up its BNPL service, called Apple Pay Later, to all U.S. iPhone and iPad users. Now, qualified users can borrow funds for purchases of $75 to $1,000 in value and then repay those funds through installments.

There are many iPhone and iPad users, so this service could be a big hit. On the other hand, Apple certainly isn’t the first BNPL service provider. Indeed, perhaps Apple is a latecomer to this field.

Meanwhile, Apple is raising the prices of its AppleTV+ streaming and Arcade gaming service plans. Specifically, Apple raised the per-month price of AppleTV+ from $6.99 to $9.99 and the monthly price of Arcade from $4.99 to $6.99.

This surely won’t sit well with the users of those services. But then, price inflation is normal nowadays and Apple might end up generating more revenue from these price increases. It’s just too soon to predict how all of this will affect AAPL stock in the coming quarters.

Sluggish China iPhone Sales Don’t Bode Well for Apple

Apple’s streaming, gaming and BNPL services may be significant revenue generators for Apple, but smartphones are the company’s bread and butter. Plus, China is an important market for the iPhone – yet, Apple’s share of the Chinese smartphone market may be in jeopardy.

Jefferies analysts sounded the alarm bells as the iPhone faces fierce competition in China. “We believe weak demand in China would eventually lead to lower-than-expected global shipments of iPhone 15 in 2023,” the Jefferies analysts warned.

Counterpoint Research found iPhone 15 sales in China to be softer than expected. Mengmeng Zhang, an analyst with Counterpoint Research, reported that, “China’s headline numbers for the 15 series are in the red.”

Most likely, this isn’t entirely Apple’s fault. The lackluster iPhone 15 sales in China, according to Zhang, are a “reflection of the broader decline in consumer spending.” Still, whatever the contributing factors may be, slow smartphone sales in China will undoubtedly have a negative impact on Apple’s financial results.

AAPL Stock Might Be Fine for a Moderate Position

Even while Apple is favored by Buffett and is a world-renowned brand, the company still has problems to contend with. No company is perfect, so be sure to weigh Apple’s opportunities and obstacles when conducting your due diligence.

Over time, Apple will almost certainly survive and deliver a certain measure of value to its long-term shareholders. Prudent investors can mitigate their exposure to Apple’s risk factors by only considering a moderately sized share position in AAPL stock.

That way, you’ll be in the trade but won’t be over-leveraged if Apple’s problems go from bad to worse.

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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