Apple Stock: A Slow Start To 2021

The new year has begun, but Apple’s stock has struggled to gain much traction.

So far in 2021, shares of the Cupertino company have declined 3%. By contrast, the S&P 500 has risen about 1% during the same period.

Even the tech sector, flat for the year (see green “VGT” line below), has been outperforming Apple. Meanwhile, the consumer discretionary peer group has climbed nearly 5% year-to-date.

Stock Rover

Fundamentals look fine

When it comes to analyzing share price performance, it is easier to talk about the “what” than the “why”. But we can still take a swing at explaining Apple’s struggles in the first few days of 2021.

Fundamentally, I see few reasons for investors to be skeptical of Apple stock at the start of the new year. From a macroeconomic perspective, the market still seems optimistic about a recovery in 2021. The broad market moves, especially in cyclical stocks, point in this direction.

In addition, hopes for government stimulus that could bridge the gap between the 2020 COVID-19 crisis and the next leg up in economic expansion were boosted by the Democratic party regaining control of the US Senate.

Simply put: the more money flows into consumers’ pockets, the more likely it is that Apple will find demand for its products and services. And Democrats are most supportive of further fiscal aid.

Lastly, data continues to mount on the success of the iPhone in the holiday quarter. Add to it the encouraging early read on Mac sales, and one can easily argue for a consensus-beating earnings report to be delivered in just about two weeks.

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