News

Apple Stock's Rough Start to 2024 Continues

4.8

Andrew R. Michaud

January 05, 2024

Apple stock has had a tough beginning to the year, and it seems to be getting worse. As of now, the stock has fallen for three consecutive trading days in 2024. Unfortunately, it appears that the downward trend will continue, as indicated by a 0.9% decrease in premarket trading on Friday.

This performance marks Apple's longest losing streak to kick off a new year since 1982 when it experienced a similar decline during the first four days of a calendar year, according to Dow Jones Market Data.

However, it's worth noting that in terms of percentage, there have been worse starts for the stock in recent years. For instance, in 2019, it plummeted by 6.2% during the first four days, and in 2016, it was down by 8.4%.

It's essential to remember that a poor start doesn't necessarily dictate the overall performance for the rest of the year. In both 2016 and 2019, despite the initial setback, the stock managed to pull through and finish the year on a positive note.

Interestingly, looking at historical data provided by FactSet, we can see that Apple stock has experienced more than a 5% drop in January on five different occasions in the past two decades. Out of those five instances, it managed to recover and generate an annual gain on four occasions.

In three of those cases, the shares bounced back from their losses by the end of April, and in one instance, it took until November. The only exception was in 2008 when the recovery didn't happen until October 2009, a significant delay compared to previous years.

While the recent performance may be concerning for investors, it's crucial to remember that stock market fluctuations are common, and past trends don't always guarantee future outcomes. Only time will tell how Apple stock will fare in the coming months and whether it will follow historical patterns or chart a new course.

Apple has recently experienced a wave of downgrades from analysts, which has put the spotlight on the company's declining sales of iPhones and Mac computers. Barclays analysts initiated the trend by downgrading Apple's stock to Underweight, followed by Piper Sandler analysts who also lowered their rating to Neutral. Both firms expressed concerns about iPhone sales growth reaching its peak and the impact of a weakening macroeconomic environment, particularly in China.

Adding to Apple's challenges, Counterpoint Research revealed that the company lost market share in smartphones in 2023. Furthermore, the broader technology sector has been facing a difficult start to the year as investors reassess the likelihood of Federal Reserve rate cuts starting in March.

As a result, Apple's stock has already seen a 5.5% decline so far in 2024, threatening its position as the world's most valuable company. Microsoft, with a market capitalization of $2.7 trillion, is now closing in on Apple's market value, with a difference of only $100 billion between the two, the smallest gap since November 2021.

With Apple's underperformance and Microsoft maintaining a relatively flat position leading into Friday's market open, it is expected that the gap will continue to narrow.