The share price of the iPhone maker plunged below $170 this week. It happened for the first time since late October large-scale correction on Wall Street. However, the major difference is that major market drops took place in autumn, when Apple stock was among flagships and drivers of last year's broad rally. Therefore, the value of Apple quickly recovered during the following month to $190+ in mid-November. Now Apple rather looks as the weakest link in the Magnificent Seven megacaps. In 2024, Apple share price lost nearly 11.5% compared to a more than 7% growth of the S&P 500, from below 4,800 to above 5,100 points. The last straw in this sadly bearish cocktail for Apple was a confirmation by Counterpoint Research on March 5 that iPhone sales in the key Chinese market lost about 24% in the first six weeks of the year. Of course, this may partially reflect a normal negative drop after the Christmas sales peak, yet sales volumes decreased against same season numbers of 2023, which cannot be explained as temporary or random effect. The problem is deeper, as domestic rivals from China are stepping on the heels of Tim Cook and Co. Another reason is that the whole China smartphone market reportedly fell 7% YoY, with double-digit declines in six weeks not only for Apple, but also for some other vendors including OPPO (-29%) and vivo (-15%). With its blockbuster Mate 60 series, Huawei added 64% in terms of 2024 vs 2023 unit sales growth in the same period. Apple's share in China's smartphone market declined from 19% to 16% YoY.

The market crowd is feared this may lead to falling margins soon, even despite participation of Apple in the AI global race and new features like Apple Vision Pro devices with its magical 3D applications but at too expensive prices. The retail tag of the headset is about $3,500, which most consumers can't handle, only dream. The recent story when Apple discontinued its electric car project did not make the company look more attractive as well, at least in the eyes of most investors, so that Morgan Stanley analysts was probably the only one which characterised it as "a positive development", citing a chance to cut ineffective costs.

Our baseline scenario is based on the growing risk of Apple stock falling through the thin ice around $165 multi-month lows first, with a high probability to touch a $150+ area and a potential wave of recovery later when the dust settles. The company currently looks Underweight.