WASHINGTON, January 29, 2017: Late last week, Apple (symbol: AAPL) announced that its way-late but (presumably) long-awaited HomePod smart speaker device would be available to the public on January 9, 2018, with pre-ordering available now.
Designed to compete with Echo, the already well-received Amazon speaker device it closely resembles, HomePod is Apple’s way-late entry into the music-cum-home control and everything else device class. These devices may or may not prove popular with tech-device lovers craving for the next new thing. But only time will tell.
Echo, controlled via Amazon’s Alexa virtual assistant will be competing against an Apple device controlled by, you guessed it, our old Apple girlfriend Siri. Apple’s speaker technology appears to be a step above the competition. But it will be entering the pricing sweepstakes in this still largely untested category at Apple’s usual premium price-point: $349.
The HomePod price competes directly with Google’s high-end Google Home Max ($399). But the new device is seriously undercut, price-wise, by Google’s bargain basement device, Google Home ($129) and Amazon’s second-generation Echo, which comes in at Amazon’s typical market-busting, Jeff Bezos price of just $99.
Though we have yet to see or demonstrate a HomePod, we’re sure Apple has the best technology when it comes to excellent, realistic music reproduction. But the jury will be out for awhile on HomePod’s expected home control features, which can be run via an app or apps that control various Apple “Home Kits.” Not many details beyond this, but this sort of voice-controlled interface that’s available with the HomePod is already well familiar to Echo/Alexa fans.
Unfortunately for Apple’s stock, however, the HomePod announcement proved underwhelming for traders and investors. Analysts have once again been ganging up on AAPL over the past week over fairly well-substantiated rumors that premium iPhone X sales numbers have been somewhat underwhelming, leading to a sharp cutback in potential Q2 orders from the company.
That rumor/truth is what killed an early January rally in AAPL, and has led to a sickening series of price declines in the stock, topped off by another bad day today, with apple closing down another 3.5 percent at an anemic $167.96 per share. The stock ticked the $180 mark just a week or so ago.
Bulls and bears make their various cases. Even with iPhoneX sales failing to meet early expectations, part of the problem may be due to the products too-late arrival in terms of availability, something that’s also plagued recent iPhone releases. That means that the premium-priced iPhone X models were on the market for far less than the full Q1sales period. (Apple’s sales quarters begin in October each year as opposed to traditional calendar quarter sales periods.)
Furthermore, there are numerous additional iPhone models still on sale, with perfectly serviceable older models, like iPhone 6 and 6s, now being offered at much more attractive price points than the iPhone 8 and X models.
For Apple bears, of course, this is a company that has been on death watch since the 1980s. Apple bulls, however, will be looking at current quarterly numbers, due out Thursday, February 1, as well as Apple’s usually conservative guidance to see what might lie ahead in future quarters.
If investors like what they see, Apple stock might get juiced again and challenge its previous January highs. If not, as any owner of Apple stock will tell you, the share-price decline could prove sickening.
The outlier in Apple’s Q1 report, however, will be the effect on the company of the GOP tax cut legislation, which could prove considerable, particularly in light of the company’s recent announcement that it would be repatriating a substantial amount of its currently foreign-held cash stash. If Apple jacks up its ongoing share repurchase program, or if the company announces some dramatic M&A deal or even a new product line (unlikely), the bulls could take control of Apple’s stock once again.
Fingers crossed for us, as we’ve amassed a fairly big (for us) position in the stock.
As for Mr. Market in general, Apple’s current price woes combined with a bad day for recent Dow Jones rock star Caterpillar shares (CAT) and an overall poor market tone served to kayo all three major averages Monday. The DJIA was off 177.23 (-0.67 percent), the broader-based S&P 500 was down 19.34 (-0.67 percent) and the tech-heavy NASDAQ was hit for a 39.27 point loss (-0.52). After all the January fun, this was a nasty day indeed.
Not helping matters much was a pile of iffy news out of Washington. Current NAFTA trade talks among the U.S., Canada and Mexico broke down over the weekend, adding potential protectionist worries to investor concerns.
Additionally, what may be an impending vote in the House to release the notorious “4-page memo.” Still unseen by the public, the document allegedly synopsizes in some detail a plot laid to oust President Trump via coordinated leaks and illegal spying instigated by carefully planted Obama cronies in the FBI and DOJ. If even half of what’s rumored proves true, this case will indeed be “bigger than Watergate” as many on the right side of the aisle are already asserting.
Oh, yes, Deputy FBI Diretor McCabe is exiting official DC earlier than scheduled, and Wikileaks’ founder Julian Assange may get sprung from the Ecuadorian Embassy in London this week, if he hasn’t already exited, stage left.
Whatever the case, however, the potential for a bombshell memo release this week is as the very least going to prove quite destabilizing, at least for the short term, as far as the Federal government is concerned.
All this, plus a sharp jump in U.S. interest rates Monday with a concurrent downdraft in January’s hot oil price increase habit just left Monday traders with a sour taste. Next add in the fact that this market is way overbought, and you get a broad-based pullback like the one we’ve just experienced.
Whether this pullback has legs remains to be seen.
Meanwhile, we have President Trump’s first State of the Union Address to Congress scheduled for Tuesday evening, January 30. Congressional Democrats, completely unaccustomed to being on the losing end of a political scandal are reacting as any predominantly socialist party usually does. Boycotts and demonstrations from the gallery by a cadre of
illegal aliens undocumented immigrants are rumored to be on the menu, as Democrats always favor stunting over substance. It all could make for a fine evening of TV for jaded entertainment palates.
Add this to NAFTA, interest rates, today’s market decline, and that 4-page memo, and we all could have a long and nasty week on Wall Street. Markets abhor uncertainty, and uncertainty is what we have plenty of right now.
Note: This article was slightly revised from an earlier version to reflect the correct date for President Trump’s upcoming State of the Union Address to Congress.