Why the Shine Was Off Apple Stock Today

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What happened

Apple(NASDAQ: AAPL) wouldn’t have become the tech industry megalith it is today without widespread investor love for its stock. That affection was barely visible on Thursday, however, as the company’s shares tumbled by almost 4%, against the 2.4% slide of the S&P 500 index. A disquieting analysis of monthly sales and an apparently stalling effort at gaining support for domestic chipmaking were the main culprits behind this.

So what

In a new note to clients, Brandon Nispel, an analyst at KeyCorp‘s (NYSE: KEY) KeyBanc, revealed that payment card data from customers of the bank showed that spending on Apple products declined notably in May. On a month-over-month basis, this fall was 8%, quite a contrast to the three-year monthly average increase of 6%.

Nispel added that the drop was the weakest May showing, even taking into account the pre-pandemic era. In Nispel’s estimation, this indicates weakening demand for Apple goods throughout the U.S.

In spite of this recent data, based on his estimates portending continued growth, the prognosticator is maintaining his overweight (buy) recommendation on Apple stock. Nispel is also keeping his $191 per share price target.

Meanwhile, an article published just before market open on Thursday by Bloomberg said that the Biden administration’s effort to support domestic chip manufacturing could be stalling.

The financial news agency said that although a bill strengthening American producers’ competitiveness against Chinese rivals is a priority for the White House, some legislators think the administration is not particularly engaged with it. Additionally, some Republican lawmakers seem determined not to give the Democrat in the Oval Office a big victory in the run-up to the November midterm elections.

Now what

Both items are concerning for Apple, as product revenue is still by far the bulk of its overall take, and it has lately pushed into chipmaking in a major way. I still feel the company is very strong in both areas, although it’s certainly worth monitoring both monthly sales and that chip manufacturer bill for signs of potentially stiff headwinds.

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Eric Volkman has positions in Apple. The Motley Fool has positions in and recommends Apple. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.