What a difference a week can make. Last weekend, the pessimism was flowing as everyone just knew Apple was going to get theirs on Tuesday. Earnings would be down, iPhone sales would be down overall, the X would be confirmed as a “flop,” and all of the tech press and analyst predictions would be confirmed. Only it didn’t quite go as many in the tech and financial communities thought it would.
This ground has been well-covered, including here. However, there is a little more to the story than just last quarter’s earnings. There is the matter of Apple’s stock price. It went from record highs to taking an absolute beating over the course of a three week period. As more negative reports and predictions came in, the more the price fell, until it was down over 5%. Even such a small percentage off of Apple’s worth translates to billions of dollars vanishing in a very short period of time.
There were many stances among financial analysts at to what this drop represented before this week’s news. There were some who saw this as a legitimate correction but expected the stock price to rebound over time, and others who thought Apple was overvalued and that this was the leading edge of a decline. A smaller minority suggested that this drop was actually a big opportunity to buy Apple stock ahead of a fast rebound that would put Apple back on track to becoming the world’s first trillion dollar company. That last group looks pretty smart right now, and those who took their advice made a lot of money yesterday.
Apple went from over 5% down this year to actually eclipsing its high stock price of $183.50 per share briefly yesterday. It closed down slightly from there at $183.83, but the message is pretty clear. Apple isn’t just back. They were never really gone. The market and analysts had it all wrong, and the actual stock price correction is up, not down.
To underline the value to be had and the opportunity that Apple stock still represents, one of the most famous investors in the world revealed what he’s been up to yesterday. Warren Buffett’s Berkshire Hathaway bought a whopping 75 million shares of Apple stock during the first quarter of 2017. Why is not surprising at all to see someone who knows so much about making money taking advantage of the tech and analyst echo chamber’s mistakes? It doesn’t get any more basic than “buy low, sell high,” but boy does it work.
When Apple’s stock price sagged on analyst fears, Buffett took full advantage. As a result, Apple may now account for up to a quarter of Berkshire Hathaway’s holdings. He made his position clear yesterday, saying that the hand wringing over iPhone X sales “totally misses the point” of the value of Apple and its stock. Maybe we should all be listening to him when it comes to Apple, instead of the guys who just lost their combined clients and followers billions of dollars.
While the news of Warren Buffett buying that much Apple stock undoubtedly had a lot to do with how quickly Apple stock rebounded on Friday, the message is still clear- Apple is not doomed. If you follow the money and the people who consistently know the most about how to make more of it, they are still growing and on the way up. Another thing to note is that this stock rebound comes a month from WWDC, when Apple will take the wraps off its latest products and features during the event’s Keynote. That will kick off a period of much greater activity with new versions of Apple operating systems and more new devices for sale heading toward iPhone releases later in the Fall. Friday’s bump in Apple stock price could serve as a launching pad to even higher prices if Apple’s coming lineup is as well-received as expected.