7th September (Wednesday) could probably be the long-awaited day for Apple enthusiasts – the company shall officially introduce its new products especially the iPhone 14 series, followed by Apple watches (series 8, Pro, SE), and possibly new Mac models, AirPods and iPads (as well as new software development environment possibly later this year or early 2023). The event can be watched via Apple TV app, online at apple.com or via YouTube. (Time: 5pm (GMT).
Being the largest company by market capitalization (over $2.5T), the performance of Apple Inc. is definitely under the spotlight, to a great degree when we all know that current macroeconomic conditions may not be friendly to the stock market.
Fig.1: U.S. Non-Farm Payrolls Economic Data. Source: HFM
Following Fed Chair Powell’s hawkish stance at Jackson Hole economic symposium, we have seen 315K non-farm payrolls added in the US economy last Friday. Despite being historically a weaker month for employment, the overall added jobs are 240K higher than pre-pandemic level in Feb 2020. It is worth noting that the data has also performed above expectations for five consecutive months.
Unemployment rate and U6 unemployment rate rose slightly to 3.7% (was 3.5%) and 7.0% (was 6.7%) respectively, however we have also witnessed labor force participation rate skewed upward towards 62.4% (was 62.1%). This could imply more people wish to go back into the workforce, thus easing pressure on wage growth. The data showed that average hourly earnings fell slightly to 0.3% (MoM) (was 0.5%), while remain unchanged from last year at 5.2%(YoY).
In conclusion, the labor market remains resilient and extremely tight. The Fed is unlikely to alter its stance, at least not in the near term. Could big companies like Apple survive this turmoil?
Fig.2: Historical Price Performance – Apple Inc. and S&P 500 SPDR. Source： barchart
Historically, the Apple share price has performed better than the S&P 500 SPDR, one of the most popular ETF that tracks the S&P 500 index. Since the Fed announced a rate hike in more than three years in March this year, APPL has displayed better tenacity towards the shock, with 6-month %change at -6.45%, versus SPY at -10.42%.
Fig.3: Reported Sales and EPS versus Analyst Forecast for Apple.Inc. Source：money.cnn
Apple Inc. is generally doing well throughout 2022, both sales and EPS were performed on par with market expectations. Nevertheless, we could also see an adverse impact the macroeconomic factors did to the company, with its sales and EPS being progressively weaker in Q2 and Q3. In the previous quarter, the company reported that its sales revenue was mainly dragged down by a slowdown in the sales of Mac ($7.3B, was $8.2B (y/y)), iPad ($7.2B, was $7.3B (y/y)), Wearables, home and accessories ($8.0B, was $8.7B (y/y)). Sales of iPhones and Services were up to $40.6B (was $39.5B (y/y)) and $19.6B (was $17.4B (y/y)), respectively.
The reporting date for Q4/2022 financial results is set on 3rd November (Thursday). Market sentiment remains optimistic, with sales and EPS expected to hit $88.9B and $1.26, up 7.11% and 5% from the previous quarter. During the same period last year, sales and EPS of Apple Inc. were $83.4B and $1.24, respectively.
Fig.4: New-Vehicle Consideration Survey. Source：Bloomberg
Stepping into near future (probably 2025), Apple Inc aims to produce its very first fully autonomous self-driving car. Recent survey showed that Apple Car (even though it does not exist) being ranked third (26%) in terms of brand consideration, while its quality impression (24%) topped the chart among other competitors. Keeping this in mind, there should be more potential for the company.
Technical Analysis：
Apple ($AAPL) share price hit its lowest at $103.10 a few weeks after the company declared a 4-for-1 stock split in August 2020. Since then, the company’s share price traded upward steadily throughout year 2021. It met resistance around $178.00, then experienced a bearish technical correction from this level throughout Q2 2022 and later hit its lowest at $129.06. Coming into Q3 2022, its attempt to break $178 has failed again, finally settled at $155.55 after market close last week. From the daily chart, $158.00 (FR 38.2%) and $165.00 (FR 23.6%) serve as minor resistance. On the flip side, $152.00 (FR 50.0%) serves as a major support level. Closing below this level may indicate the bears continue extending towards $147.00 (FR 61.8%) and $139.00 (FR 78.6%).
