Apple Stock Fall Off-Have I Already Been Validated?

After years of holding the stock, I sold out of Apple in August, and I bought ServiceNow. Quite dramatically, I wrote an article called “I Sold all my Apple and Bought ServiceNow. I Was a Year Late,” which sounds like the lead-in to a sexual assault allegation against a Hollywood mogul. Anyway, I sold out of Apple, an act that is always quite bold, and an act that has been regretted by many, many people in the past. Since then, ServiceNow is up 36%, and Apple is down 2%. How awesome should I feel about my decision? And is this like LuluLemon? Which I called as a flop before it plunged 60%, danced on its grave/doubled down before the stock immediately popped 60%. While my price prediction was correct, and I absolutely still stand by it, doubling down was, in retrospect, a mistake.

Here is why I do not think I am making a mistake in telling you to sell out of your Apple stock/stay away. Revenue growth is still absolutely atrocious. Apple is growing its revenue in the very low single digits right now, and I only see that getting worse. Everything, for me, is about that top line. My portfolio is intentionally weighted to be very future-oriented, and Apple is absolutely resting on its past laurels when it comes to how analysts are looking at it. I saw one analyst say that Apple would reach a market cap of $5 trillion. ON WHAT? What are they doing that will add 1.5 trillion in value to the company?

iPhone shipments likely fell in this most recent quarter, disappointing but predictable. iPhone sales in China were down 20% from a year earlier, contradicting David Tepper’s bitch ass (fuck you David Tepper) who thinks that China is doing much better than they actually are. For some reason, people think that these new subsidies from China are going to drive up iPhone purchases, which is not going to happen because the Chinese people are getting about $70 for phones, a figure that is about 9% of the price of an iPhone in China.

Apple Intelligence is not where it is at so far either. Apple Intelligence is basically just Chat GPT on your phone, which is a cool little gadget, but will not convince anyone to buy a new $1,000+ phone.

This brings me to another point, I love differentiation. Across all of the positions in my portfolio, each of them has a deep moat compared to their competitors, one that they can defend from attacks with. Apple used to have a deep and wide moat, but that no longer exists to quite the same degree. It is so hard to find differences between a Samsung phone and an Apple phone, or a Pixel. This is not to say that the iPhone has been surpassed wholly, but in some areas like camera quality, things are extremely tight.

Two things are currently keeping Apple ahead in terms of phone competition. Their brand is still entirely superior to these other companies. People with iPhones, and Apple products in general, have an air, especially in the younger demographics, that Samsung for example, completely lacks. Second, Apple has a giga-gigantic hoard of money that they can spray wildly in whatever direction they want. Their $100 billion stock buyback program, for example, is the byproduct of stuffing every department with more money than they can handle until there is no other place to put their cash.

Outside of the iPhone, things also look not wildly sunny. The Mac is still strong and a great product, but the Apple Vision Pro is half a decade away from being anything, Apple Watches are inferior and more expensive than 40 other exercise watch brands, the Apple Car exploded in a fiery inferno of Apple’s boredom, and much, much more. Anywhere you look, Apple is fighting some battles, with a lot of their battles centering around a rising tide of competitors.

That said, Apple does have genuine strength in its ecosystem. You can have an Apple TV, Apple phone, Apple Music Subscription, Apple AirPods, Apple Watch, Apple navigation, Apple CarPlay, Apple computer, Apple VR, and everything works together. If it doesn’t work together, if you have an Android for example, then it’s really annoying, and that keeps you from switching.

I am maintaining an underweight rating (just to be fancy), and I would put a price target at about $190 by year’s end, with a lot of volatility expected. And there is an 80% chance that I am wrong, as too many have been in the past because this company is absolutely still the top dog in pretty much every field it chooses to enter.