Apple stock struggled to gain any lift on Tuesday, March 30. Shares finished the day down -1.2%. Meanwhile, the S&P 500 ended the trading session lower -0.3%.
The dip put shares of the Cupertino company further into correction territory. Now, Apple is down nearly 10% for the year so far, and 16% below the late January all-time high.
This time, unlike in recent days, a couple of company- and industry-specific issues seem to have driven stock price action the most, rather than macro-level forces.
The Foxconn challenges
Taiwanese-based chip maker Hon Hai Precision Industry Co, more commonly known as Foxconn, provided a business update that was equal parts bitter and sweet for Apple. Keep in mind that this is the Cupertino company’s key parts supplier.
On the one hand, the Asian company announced that next-quarter sales will likely be better than normal, a result of work-from-home trends driving demand for tech devices. This is good news for Apple and its peers.
However, the market seemed more interested in Foxconn’s disclosure of potential materials shortage in the consumer electronics supply chain lasting through 2022. This could be a problem for Apple, amid the early innings of the 5G supercycle.
To be fair, I initially thought that the market’s bearish reaction to the news had been a little overdone. Foxconn itself qualified its supply shortage warning, saying that the issue could impact less than 10% of client orders.
Also, history has taught us that lack of proper product availability, when temporary, only delays Apple‘s sales, merely shifting demand from one period to the next. This was the case, for example, between fiscal fourth quarter 2020 and the holiday season.
Epic battle and others
Apple stock’s struggles did not end with Foxconn. Epic Games submitted an antitrust complaint to UK authorities. This is yet another chapter in the “epic battle” between Apple and much of the tech world over App Store commissions.
In my opinion, Apple investors should get used to and comfortable with antitrust scrutiny from companies and governments around the world. It is unclear, at this point, whether the litigious nature of this matter will be a drag to Apple stock in the longer term. I even asked Twitter for its opinion, a few days ago:
Also worth mentioning, yields continued to climb this Tuesday. The interest rate on the 10-year note made its first intraday move past 1.75% since the start of the COVID-19 crisis. Keep in mind that rising yields tends to be bad for growth stocks, like Apple.
Lastly, although probably much less of a market mover, Apple has already scheduled its WWDC 2021 – the company’s five-day long developers’ conference. The event will take place between June 7 and June 11, and the Apple Maven will cover it via live blog.
Last year, WWDC ended up being a big deal for the company and its investors, since Apple announced the M1 chip that now powers a few of its personal computers.
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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)