- Apple Watch sales have slowed to a trickle.
- There are problems at iCloud, Apple Music, and iPad sales are slowing.
- It's a great company but have we hit peak Apple?
You may not have noticed, but the stock of Apple (NASDAQ:AAPL) is rolling over. While it’s still up 11% on the year, it’s actually down 3% over the last three months. Apple stock price of $122.57 (on July 8) was last seen in February.
The Watch is starting to take a pounding. There are reports that weekly sales of the Watch are down 90%. Host Jim Cramer at CNBC's most popular show, Squawk on the Street, is a huge fan of the product, but after another Cramer rant on the set of their show this week, co-host David Faber looked toward the third man on their set, Carl Quintanilla, who held up his hand to show he was no longer wearing the one he’d gotten. Too much hassle, he said.
Also see: Apple Stock Analysis Video evaluating its fundamentals.
By contrast, FitBit (NYSE:FIT) wristbands are flying off the shelves. They’re simpler, and focused entirely on health, like the FitBit HR I bought as the stock was coming public. Press a button for the time, press it again to see how active you’ve been, press it a third time and get your current heart rate. Small wonder that Fitbit shares are up 40% since their IPO last month.
But this is not the only bad news to be hitting Cupertino.
The launch of Apple Music has been far from untroubled. Sales of the iPad continue to slow in the face of cheaper “white label” tablets. Sales of Macintosh computers were up just 10% during the first quarter of 2015, compared with a year earlier, and down almost 1 million units from the previous two quarters.
The iCloud file storage system has come under fierce criticism. Apple Pay, after some initial success, is not winning the battle for digital wallet customers. This added to the fact that Apple Pay is facing fierce competition in the digital wallet space. And then there’s the strong dollar, which makes Apple’s huge international sales look smaller.
Fans of the Apple stock will call all these problems opportunities, and a good chance to get into the stock at a bargain price. The iPhone numbers alone should sustain the stock at present levels, they say, and the iPhone 6S is bound to be another big hit. Apple Music is becoming a “must have” for Apple fans, driving higher adoption of iOS 8.4, the latest version of the operating system.
You can currently get Apple shares at a below-market 15.5 Price/Earnings multiple, year-over-year sales growth remains 25%, the company draws one dollar in four to its bottom line, and there’s enough cash floating around to cut the effective market cap to well below $600 billion – it’s currently at $726 billion.
Still. Now that it’s part of the Dow Jones Industrial Average I would not expect Apple to garner an above-market Price/Earnings multiple at any time in the future – the numbers are just too hard to grow from here. Cracks are starting to show in the Apple façade, as its “spaceship” headquarters building rises in Cupertino.
I am not selling yet, but we may have hit peak Apple.