Apple Stock Is Off Way More Than Nasdaq. What Went Wrong—and Could Go Right

Apple stock has lagged badly behind the Nasdaq Composite, but there is hope. The iPhone 15 is set to be launched next month.

The iPhone 15 is expected to be released sometime in September.

August hasn’t been a kind month for the stock market. As of the close on Friday, the Nasdaq Composite had fallen 5.3% in August and was on pace for its worst monthly performance of the year, according to Dow Jones Market Data. Apple (ticker: AAPL) had fallen 9.1%, its first monthly drop in 2023.

Through Friday, Apple was underperforming the Nasdaq Composite by 3.8 percentage points, and was on pace for the largest monthly underperformance since November 2022.

News in early August that sales fell 1% from a year earlier in the quarter ended July 1 pushed the stock lower. Importantly, Apple posted a year-over-year drop in sales of the iPhone, the product that brings in the most revenue for the company. On a call to discuss the results with analysts and investors, management said that there has been a decline in the U.S. smartphone market over the last couple of quarters.

“Products revenue was $60.6 billion, down 4% from last year, as we faced FX [foreign exchange] headwinds and an uneven macroeconomic environment,” Chief Financial Officer Luca Maestri said.

Market research firm International Data Corporation said in a report Aug. 11 that worldwide smartphone shipments declined 6.8% from the previous year in the second quarter, marking the eighth consecutive quarter of contraction “as the market struggles with soft demand, inflation, macroeconomic uncertainties, and excess inventory.”

But there is hope. Apple is expected to release its newest iPhone 15 sometime in September. As Barron’s has reported, Apple stock historically has gained in the early months following a phone launch. That could happen again after the iPhone 15 is released.

“The iPhone 15 is set to bring design and feature updates, and we think that the design changes… will not only drive device refresh, but also drive a higher ASP [average selling price] mix via both higher pricing and incrementally convincing consumers to spend more and purchase the Pro models vs. the base models,” Evercore ISI analyst Amit Daryanani wrote in a research note on Aug. 18. He rates the stock at Outperform with a $210 price target.

Wedbush analyst Dan Ives is also upbeat.

“[We] expect a $100-$150 price increase on the iPhone 15 Pro/Pro Max version which after major carrier promotions should be digestible to many upgrade customers; which we estimate represents about 240 million iPhones worldwide that have not upgraded in 4 plus years,” Ives wrote on Aug. 15. He rates the stock at Outperform with a target of $230 for the price.