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Well folks i have some absolutely horrible news to share with you in regards to apple here tonight and i want to explain why apple stock is going down and going down a lot more i also i have a couple investments uh in a couple companies that get significant amounts of revenue from apple and i’m going to share in this video what i’m planning on doing with those stocks
As well and i have no short position on apple i don’t have puts on apple i actually am not going to plan on buying put options or short selling apple although i think they’re going to be money makers i just hate the feeling of betting against companies and especially a company that’s historically as great as apple and plus it kind of leads me into like a trading
Mentality which is something that i just try to my best to stay away from so um just want to be upfront with that and kind of share all that right there okay so first off obviously apple stock has been you know having a tough year but not a disastrous year it’s actually been holding up fairly well compared to the overall market in terms of the nasdaq that is the
Nasdaq’s down over 30 percent year-to-date apple’s down less than that it’s down 25 there’s a lot of stocks that are down 50-plus percent year-to-date apple’s not one of those okay it is going much lower unfortunately though uh the first thing you got to understand about apple they basically iphone makes up over half of the company’s revenue okay so if the iphone
Business is hurt in any meaningful way then essentially and we got some really bad news in regards to iphone just a bit ago but uh you know if if iphone business is hurt it hurts apple very bad okay services makes up about 18 of their business and that’s a business that’s been very hot not just because they’ve been growing and doing a good job running that business
But also because uh the stimulus money everything that was pumped out there people forced to be home a lot of money spent on games things like that right little five dollar purchases ten dollar purchase here and when you have hundreds of millions of people using your devices on a daily basis you know when you get your uh as they call it 30 apple tax you know and
Everybody has money and stimulus money and things like that it’s it’s a good thing for your business when everybody’s forced to be home right there’s a company named micron this company is one of the biggest memory chip companies in the entire world okay this is where the story gets really interesting micron is a stock that’s been pretty hammered already this year
It’s down 42 and it’s likely going down more because just after hours and by the way micron’s largest customer it’s rumored to be apple uh i believe it is apple it’s sometimes hard to find the exact details about you know who’s their largest customer and how much of a percentage of their business but in my opinion it’s apple and the reason being is microns huge in
The pc space and the smartphone space in terms of their memory chips and if you don’t know samsung has their own memory chip business okay so is if if you know i don’t i don’t think microns uh you know maybe samsung uses some micron chips but if they do it’s a very small amount and the reason being is imagine you own pizza hut and instead of selling uh customers
You know pizza hut you sell them dominoes that like it wouldn’t make sense right and so with samsung of course they’re going to always give their own business preferential treatment and you want to use samsung memory chips right which is a big competitor micron micron technology a major vendor of memory chips for pcs and smartphones said thursday after the bell
That it expects smartphone sales to be meaningfully meaningfully lower than previously expected for the rest of 2022 citing a reduction in consumer demand this is also very bad news for the economy we a lot of us have already been fearful of this we’re starting to see everything play out right in front of us now micron ceo sanjay said on the earnings call with
Analysts that he that he expected smartphone unit volume to decline by around five percent versus last year analysts were expecting growth of five percent so it’s a ten percentage point difference there right you’re expected now five percent down everybody else was expecting five percent up uh that’s no but okay the company also warned that it believed that the
Pc sales could decline 10 percent versus last year in that it was making changes to its production growth to match weaker demand he added that some pc and smartphone customers were quote adjusting their inventories in the second half of the year he says quote if you were to translate it into units it amounts to like 130 million units reduction versus expectations
Similarly in the year for smartphone similarly for pc let’s say 30 million kind of reduction in terms of total unit volume versus uh you know projections earlier the year 130 million reduction smartphone 30 million reduction in pc and here’s my other part this could get worse right that’s just as of right now microns warning is the latest sign that the market for
New computers and phones is starting to slump after two years where the pandemic supercharged growth as people worked and you know basically how to do school from home all that stuff right plus stimulus money once again micro supplies memory to smart phone makers including apple and motorola and these other players but let’s be honest there’s one big big dog
For micron the big big dog is apple okay it’s apple and so this is a disastrous situation because this means likely apple’s going to end up their revenue is going to likely shrink in the back half of this year and most analysts are expecting uh growth in the back half of this year okay i think the biggest question is going to be how much does apple’s revenue uh
Potentially decline i think that’s going to be the big debate that’s going to be the next thing now okay apple’s revenue could likely decline the backyard for this year is it like a three percent decline five percent 10 that’s what we’re gonna have to find out and it could get worse as projections continue to come out here okay so apple’s kind of middle you know
I pulled up the dow dow’s down about 16 year-to-date sp 500 is down over 21 percent year-to-date so far apple’s down almost 25 percent year-to-date and uh the nasdaq’s done over 30 year date problem with apple it’s such a big huge obviously weight on the market right over two trillion dollars plus it’s huge for the psychology of the market that apple essentially
Pulling down it’s going to pull the dow down it’s going to pull the s p 500 down more and you know the nasdaq’s already been so hurt but it’s going to pull down the nasdaq more as well okay the next thing and it’s already starting to play out but we’re going to see it even more so now now you’re starting to get what i call you know confirmations of recession now
At this point in time you know between obviously the atlanta fed numbers what these companies are saying and then now big dog apple you know once again this is an apple coming out and saying it’s a huge supplier of apple micron coming out and saying uh get ready for apple’s earnings and their guidance oh boy okay you’re now getting what’s called confirmation of
Recession which explains why the oil and gas stocks are starting to tank tank tank right and you know when you start getting confirmed recession these babies are going to keep going down and they’re already losing a ton of their gains it’s going to likely get worse and as those pull down those will also pull the dow 30 down because there’s several companies in the
Dow 30 that are oil and gas companies it’s going to pull the s p 500 down and actually there’s some in the nasdaq as well so it’s going to pull down the nasdaq as well and that’s been one of the very few areas that’s actually been holding up very very well in the stock market and to add insult to injury in this whole situation apple’s trading historically very rich
Right now apple you know for many many years since like you know as long as i can remember like 2013 2014 when i started tracking apple on like a i guess you say a higher level like i always remember apple trading at a trillion p of like the 10 to 15 range sometimes like 17 18 something like that but in recent years because of ronnie rona all the stimulus money
And everything was pumped up out up there and then obviously with everybody being forced to be home pc sales going crazy ipad sales and all those things because of all that happening it basically supercharged apple’s growth it made everything look way better than expected uh apple is obviously able to just you know command insane prices and they had insane demand
Because everything that was going on and so it led basically investors to start value in the company very differently than how it was usually valued at a 10 to 15 maybe you know 15 to 18 range for a trailing p and at one point it was valued at you know almost a 32 right so that’s already started to come down we’re at like a 23 but here’s a problem likely you know
Over this next year they’re going to be actually far less profitable than previous okay so likely not only does this trailing p need to come down but it needs to come down significantly because the company is likely not going to be as profitable moving forward for at least the next year than they were in the past okay and that’s i would say almost a certainty in
Now at this point in time so this is a big big issue for apple it’s a big big issue for the stock market and uh unfortunately apple’s you know it’s going to take a miracle like literally a miracle of life to keep the stock anywheres in the 130 140 range it’s going to take a real miracle basically what would have to happen is the entire market would have to start
Skyrocketing upward to keep the stock from falling because everything we’re looking at is uh the numbers are going to get bad wall street’s going to realize it and be like oh crap we got a valuation problem and we got a numbers problem they’ll sell it off heavy it’s going to pull down the whole market more and it just is it is what it is and the stocks that are
Usually going to be the most hit by this or the stocks set had been holding up decent those ones will be the most heavily hit the ones that have already been absolutely nailed they’ll likely get hit as well they just won’t get hit as hard because they’ve already been so devastated now at this point in time and they’re not as index weighted compared to some of these
Other stocks guys so you know it’s part of the process man it’s part of the process unfortunately we knew this day was coming uh the next confirmation will be when apple releases earnings and um doesn’t have great things to say in the conference call and they’re gonna have to talk about they’re gonna have to talk the truth about slowdowns and consumer demand for
Their products this is bottom line you know i go to these apple stores i see these apple stores they’re not even close to being as busy as these stores were a year ago it’s not even it’s not even on the same scale not even on the same scale so anyways guys just wanted to cover that for you i want to show you that i think these things are important i hope you enjoy
A video like this i know it’s not great news but i got to give you what it is man it is what it is um someday we’ll have growth again in these companies but it’s just not today much love and have a great day
Transcribed from video
Why Apple Stock Will Collapse Next 45 Days By Financial Education
