Apple finally falls into bear market territory. Is it a buy yet?

Posted: 13 May 2022 11:45 am

After fighting off the bear market so far, the stock succumbed on Thursday, dropping 20% from its peak. Apple at 20% off may sound like a deal, but it’s still at levels first hit only last fall.

Apple (AAPL) fended off the bear market for as long as it could and has now joined the other FAANG stocks in the market sell-off that has dragged down the tech-heavy Nasdaq Composite to its lowest level since late 2020.
Shares of Apple fell into bear market territory Thursday, closing down slightly under 3% for the day at $142.56. The stock has now retreated as much as 22% from its January high of $182.94.
Investors may be wondering if this is the point where the market gives in, and a signal that we’re closer to a market turnaround. Does it indicate a buying opportunity for the stock? After all, consumers would never ignore a 20% sale on Apple products.
Stocks, though, are harder to judge. Here’s what to consider.

Apple loses “most valuable company” title

Saudi Arabian oil and gas company Saudi Aramco overtook Apple as the world’s most valuable company Wednesday and held the title through Thursday’s close. This comes as oil prices boosted the oil producer and as rising inflation continues to strangle technology stocks.
Shares of Apple closed Wednesday at $146.50, giving it a market cap of $2.37 trillion. By Thursday, it was worth $2.31 trillion. Meanwhile, Aramco has been trading near its highest ever levels, with a market cap of about $2.42 trillion on Wednesday and $2.38 trillion on Thursday.
In early January, when the COVID surge among tech stocks was still in full swing, Apple’s stock briefly reached $3 trillion in market value intraday. Now, the stock is down 22% from the high.
The other FAANGs — that elite mega-cap tech group including Meta (formerly Facebook), Amazon, Netflix and Google — show much bigger bear losses from their peaks.

Is Apple stock approaching buy territory?

If you were buying shares of Apple five months ago at $180, you’re probably going to find it attractive at its current price.
For a five-year view of this stock’s performance, see the graph in our dedicated guide to Apple stock.
The company recently reported its second-quarter fiscal year 2022 financials and it was yet another record-breaking quarter. Apple posted an impressive $97.3 billion in revenue for the March quarter, 9% higher than the year-ago quarter. More than $25 billion of that ended up as profit, which translated to quarterly earnings per diluted share of $1.52, which is another all-time record for a March quarter.
“We are very pleased with our record business results for the March quarter, as we set an all-time revenue record for Services and March quarter revenue records for iPhone, Mac, and Wearables, Home and Accessories,” said Apple CFO Luca Maestri in a statement. “Continued strong customer demand for our products helped us achieve an all-time high for our installed base of active devices.”
Apple also returned nearly $27 billion to its shareholders during the quarter.

Buffett bought for more

This strong quarter wasn’t enough to keep Apple stock from joining the bear market, but it may have created a valuable buy opportunity. According to CNBC, billionaire Warren Buffett snatched up $600 million worth of Apple shares when it pulled back for three days last quarter. I wonder what he thinks of Apple at $142.56?
Still, some analysts are saying the market’s bear phase could last a few more months. With Apple down only to levels it first hit early last fall, this may well not be the bottom.
But for those who’ve always wanted Apple in their portfolios as well as their pockets, this might look like the right price.

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At the time of publication, Matt Miczulski owned shares of AAPL.

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