3 Reasons Why Investor Should be Caution for Apple Inc. (AAPL)
On April 28, 2021, Apple Inc. released its second quarter results. Revenue up 54 percent to new March quarter record from US 58,313 million to 89,584 million. Services and Mac revenue reach new all-time high with US 16,901 million and US 9,102 million. Quarter gross profit margin increased from 38.3% to 42.5% year over year. Quarter net profit margin increased from 19.3% to 26.3%. However, Can this strong growth extense through the rest of 2021? Investor should take the following factors for consideration.
Expectation from competitors
According to the research from Counterpoint, Samsung was the largest manufacturer in 2021Q1 with 22% global smartphone market share. Apple with 17% , Xiaomi with 14% , OPPO with 11% and VIVO with 10%.
After the strong growth in 2021Q1 smartphone market, it may start to decline in 2021Q2. According to the report from CAICT, China’s domestic mobile phone shipments in Apirl were 27.5million which down 34.1% year-over-year and down 23.8% month-over-month. Refer to an article of SINA.com dated 28 May 2021, there was an rumor China’s smartphone manufacturers will reduce their full year sales target from 10% to 20%.
From Apple’s second quarter results, iPhone account for 53.5% total sales and China market account for 19.7 total sales. If China smartphone market slow down as expected by Apple ‘s competitor, it will also affect part of apple ‘s future revenue.
Unload from professional investor
According to TheStreet, different professional investors have reduced their Apple holding in 2021Q1. Warren Buffett’s Berkshire Hathaway reduced around 100 million Apple shares during 2020Q2 to 2021Q1. Cathie Wood’s ARK Investment had closed all its position in Apple stock. Bill & Melinda Gates Foundation also sold one million Apple shares in the first quarter of 2021.
Selling from professional investor may seems as a sign that the stock may be overpriced and reaching its peak.
Shortage of chip have been a problem among smartphone industry since the covid-19 pandemic. Taiwan is one of the largest supplier hub for Apple. Recently, covid-19 outbreak in Taiwan haven’t affect those supplier’s operation, such as Hon Hai Foxconn and Pegatron. As the outbreak continuous, will it turn into a blackswan as no one expected?