Apple: Dead Money At Best

Nov. 09, 2023 3:57 PM ET Apple Inc. (AAPL)

Summary

• Apple Inc. stock has become range bound recently and seems like dead money due to negative growth, high valuation, and lack of risk premium, all within a top-heavy market.
• The company's valuation is substantially higher than its 10-year average, and any risk premium to justify holding the stock has disappeared.
• Geopolitical concerns, including conflicts in Europe and the Middle East, and a potential Chinese invasion of Taiwan, could also negatively impact Apple's business.
• 5 reasons there is no compelling reason to hold Apple at current trading levels are highlighted in the paragraphs below.

The article discusses the current status of Apple Inc. (AAPL) stock, suggesting that it has become range-bound and might be considered "dead money" due to several factors. The reasons highlighted in the article include negative growth projections for FY2023, a substantially higher valuation compared to its 10-year average, the absence of a risk premium to justify holding the stock, a top-heavy market with a significant concentration of market capitalization in the top five companies, and geopolitical concerns, especially regarding a potential Chinese invasion of Taiwan.

The author notes that despite a strong rally in the first half of 2023, Apple's stock has stalled, and there are concerns about its future performance. The negative growth projections for revenues and earnings, combined with a high valuation, lead the author to suggest that the stock may not offer compelling reasons for investment at current levels. The lack of a risk premium and the concentration of market capitalization in a few large companies in the S&P 500 are also considered worrisome factors.

Additionally, the article highlights geopolitical concerns, such as conflicts in Europe and the Middle East, as potential factors that could negatively impact Apple's business, particularly in the event of a Chinese invasion of Taiwan.

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