Omicron fears caused most stocks to fall yesterday, including tech giants like Amazon, Google, Meta, and Microsoft. The Dow lost 651 points, the Nasdaq was down 1.6%, and the S&P 500 down 1.9%.
AAPL, however, not only weathered the storm, but saw its share price increase by 3.16% as investors saw it as a safe haven, with good short- and long-term prospects …
The new Omicron COVID-19 variant is spreading rapidly between countries, and appears to be particularly infectious. Early indications are that existing vaccinations are effective against the new mutation, but investors are still concerned about the potential economic impact of further lockdown measures designed to limit the spread.
CNBC reports that investors consider AAPL a safe bet in the short term because it has the cash needed to ride out any economic slowdown – and could even benefit from cost savings.
Needham analyst Laura Martin told CNBC that investors turned to Apple on Tuesday because the company has prodigious cash flow, allowing it to endure any slowdowns in the economy and take advantage of falling prices.
“There’s a flight to quality with companies that you know will weather the storm, not go bankrupt, not have financial distress,” Martin said, noting that other large-cap tech stocks aren’t down as much as smaller firms […]
Martin said there are indications that Apple’s current products, especially its iPhone Pro models, are selling well, potentially leading to a big December quarter for the company. Apple saidin October it expected record revenue in its fiscal first quarter, over last year’s $111.4 billion in sales, despite supply constraints.
“Lots of really good numbers coming out of retail about how the products are selling. Tablets, especially the high-end iPhones, all of which says they’re going to have high margins and high revenue for the fourth quarter of this year,” Martin said.
But the company is also seen as a good long-term bet, with current excitement about the company’s first VR/AR headset in the context of the metaverse buzz.
“The biggest criticism of Apple for the last five years is no new products. When you look at the product pipeline, lots of excitement there, especially in the press today about how they’re going to introduce augmented reality glasses at the next WWDC in June,” Martin said.
Additionally, Apple is able to protect its own share price through continued stock buybacks and dividend increases.
Telsa was another winner, up 2.55%.
Taipei store photo: Gnustang/Unsplash
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