No two stocks better represent investor risk-taking sentiment than Tesla and Apple, two of the five largest, most popular companies in the S&P 500. And no two stocks now represent investor risk aversion than they do now.
Apple, of course, is the biggest stock in the S&P 500 and probably represents safety more than any other stock. And through Aug. 17, it had acted that way, with the stock down just 1.7% versus a 10.3% drop for the S&P 500. It had also outperformed the rest of big tech, including Amazon, Alphabet, and Microsoft, which were down 15%, 17%, and 13%, respectively at the same time.
But a lot has changed since that August peak. Apple has dropped 18%, while Amazon has fallen 18%, and Microsoft and Amazon have declined 17%. Apple, in other words, is just another tech stock.
What changed? Apple has had a busy last couple of weeks that sent the stock lower—and it all started when the company revealed its newest line of products, including the iPhone 14, in early September.
Initially, reports showed that demand for the phone was strong, specifically for the more expensive Pro and Pro Max models. Then, more information about iPhone demand started to come in. An analyst from Jefferies noted that new data led him to believe that iPhone 14 demand wasn’t as strong as expected in China. Then, Bloomberg reported that Apple reversed plans to boost iPhone 14 production later this year on demand weakness, and the BofA Securities analyst downgraded the stock to Neutral from Buy. It’s still outperforming the S&P 500 and other big tech stocks this year, but it’s doing its best to catch up—or down.
Tesla, on the other hand, represents investors’ desire for a big bet that will pay off. The company’s Chief Executive Officer, Elon Musk, is the richest man in the world, and has been in the news a lot recently amid a legal battle over the sale of social media platform Twitter (TWTR). And the stock held up much better than Amazon, Alphabet, Microsoft, and even Apple from Aug. 17. It fell just 13% through Sept. 30, more than 6 percentage points fewer than its nearest competitor, Alphabet.
That all changed on Monday. Tesla stock slumped 8.6% after the company reported on Sunday that it delivered 343,830 cars and produced 365,923 in the third quarter, which was a jump compared with the 254,695 vehicles Tesla handed over to customers in the second quarter, but still below Wall Street estimates. Wall Street said the shortfall was a result of logistical problems, rather than something more fundamental. However, an argument could be made that investors are concerned about the demand for the electric-vehicles, with the delivery shortfall amounting to around 14,000 or 15,000 units.
Of course, neither Tesla nor Amazon is immune to broader market conditions, and the markets have struggled this year. Concerns over the Federal Reserve hiking interest rates too aggressively and fears of a potential recession have caused stocks to drop, and the Nasdaq Composite has fallen 31% in 2022 and 17% since Aug. 17.
And that’s something not even Apple and Tesla could withstand.
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