In an otherwise largely gloomy earnings season by the big techs $Meta Platforms, Inc.(META)$, $Amazon.com(AMZN)$, $Alphabet(GOOG)$and $Microsoft(MSFT)$, $Apple(AAPL)$'s resiliency in its set of third-quarter earnings not only boosted its share price by over 7.5% upon release of the results, but also lifted sentiments of the broad market that ended the last trading session up over 2.4% in the S&P500 index and almost 2.9% in the tech-heavy NASDAQ index. What a refreshing sight and light at the end of the tunnel after recent darkness, as the market is relieved that fundamentally strong firms may overcome and prevail over the economy slowdown.
Iโm glad that Iโve been dollar-cost averaging into Apple and S&P500 ETF during the most recent market turmoil that saw Apple stock succumbed below $140 per share under heavy overselling amidst demand slowdown and recession fears on the back of rising interest rates, as a hawkish Fed turns on its full throttle to rein in a surging inflation not seen in decades.
I remain optimistic that Apple will be able to withstand a recession with its strong cash position in a robust balance sheet that will enable the iPhone maker to fund continual innovation and development with its operating cash flows, without having to resort to borrowing at prevailing rising interest rates.
With its strong branding and tremendous base of loyal customers who swear by only Apple products and rushes to grab the latest Apple gadgets at every new product launch, Apple has an unparalleled pricing power.
A captive market of Apple users for its services also contribute to sustainable cash flows at comparatively low operating costs and increasingly accounting for sizeable portion of Appleโs revenue.
An Apple Car rumoured in research and development will tremendously increase Appleโs addressable market and give all incumbent car makers a hard run for their money.
Its huge size also renders it supreme bargaining power over its suppliers in its supply chain, many of which count Apple as their largest client.
With these enviable characteristics, Iโm confident that not only will Apple prevail over the economy downturn, but it will also emerge stronger over time.
Hence, Iโll continue to dollar-cost average into Apple post-earnings by taking advantage of any short-term price weakness for long-term benefit.
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