A $1,000 Investment In Apple Just After Thanksgiving Could Be Worth This Much By The End Of The Year

Zinger Key Points
  • Apple is facing multiple challenges this year, including production disruptions and slowing consumer spending.
  • The final quarter of the calendar year is historically Cupertino’s seasonally strong period in terms of sales.

Apple, Inc.’s AAPL stock is down about 16.1% in the year-to-date period. The decline is almost in line with the performance of the broader market, with the S&P 500 Index down about 15.5% during the period. The tech-heavy Nasdaq Composite Index has plunged a steeper 28.2% during the period.

How Apple Typically Fares In Holiday Quarter: The December quarter is Apple’s seasonally strong period, given that it encompasses the holiday selling period. In the fiscal year 2021, the company derived roughly 30% of its revenue in the quarter. When hardware sales alone are taken into account, their share of total revenue climbs to over 32%.

The December quarter, which is Apple’s fiscal year first quarter, assumes importance because the company customarily launches the new iteration of its flagship product – the iPhone, in September or October. Shipments typically begin in the December quarter. This time around, the iPhone 14 shipments started in mid-September, pulling in some of the sales into the September quarter.

Other factors to consider are the promotions and discounts made available for the holiday shopping season, which makes Apple’s pricier iPhones more affordable to users, likely pushing up volumes.

Does Benefit Seep Down To Stock: Using the past 10 years to analyze whether stronger sales translate into stronger returns for Apple investors shows that the stock has not budged much for most years. That said, the past three years have seen the stock rally hard into the year-end.

Here are the returns of Apple stock between the day after Thanksgiving Day and the year-end:

Returns From Position Entered Now: A $1,000 invested in Apple at Friday’s closing price of $148.11 would fetch 6.8 shares. Assuming the stock returns 0.55%, in line with the average of the past 10 years, it would be trading at roughly $149 at the end of the year. This would mean the 6.8 shares one holds now would be worth $1,013.20.

Headwinds Abound: The year 2022 has proved to be a challenging one for Apple. Mid-quarter, the company came up and said it expects lower iPhone 14 Pro and iPhone 14 Pro Max shipments due to production disruptions at its supplier Hon Hai Precision Manufacturing Company Limited’s HNHPF major iPhone factory located in Zhengzhou, China due to renewed COVID-19 outbreaks.

Wedbush analyst Daniel Ives said in a recent note that higher-end iPhone models were in short supply, with lead times stretching. He expects Black Friday weekend iPhone sales to be eight million units, down from 12 million units previously.

Also, the uncertain macroeconomic situation has pushed consumers to the defensive, prompting them to tighten their purse strings.

Between now and the end of the year, Apple stock will likely trade in reaction to external factors, including economic data and the Fed's decision in December, as well as how the COVID-19 situation in China (its major production hub) unfolds.

Read Next: How to Buy Apple (AAPL) Stock

Photo: Courtesy of unsplash.com

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