The Apple (NASDAQ: AAPL) stock price has performed uncharacteristically badly during the past 12 months. It’s down a quarter since the start of 2022, and is currently 27% below its all-time high, achieved in December 2021.
Stockholders are not used to such a disappointing performance.
Apple was the first company to achieve a stock market valuation of $1trn (August 2018), $2trn (August 2020), and $3trn (January 2022).
Despite the recent fall in its stock price, Apple is still the most valuable company in the world, with a market cap of $2.1trn. To put this in context, its the same as the gross domestic product of Brazil, a country with a population of 214m!
But, have I left it too late to include the stock in my portfolio?
Check out the pips
The company’s 2022 full-year results (to 24 September) showed an improvement in both sales and profitability, compared to the previous year.
| Metric | 2021 | 2022 | Change |
| Net sales ($bn) | 365.8 | 394.3 | + 28.5 |
| Gross margin ($bn) | 152.8 | 170.8 | + 18.0 |
| Gross margin (%) | 41.8 | 43.3 | + 1.5 |
| Net income ($bn) | 94.7 | 99.8 | + 5.1 |
The gross margin percentage (sales less the cost of producing the goods, expressed as a proportion of revenue) increased as well. With global post-pandemic supply-chain problems, and inflation surging across the world, this represents a major achievement.
Core
Apple’s principal product remains the iPhone, although its services (principally TV, music, and podcasts) are becoming increasingly popular.
| Net sales by product category | 2021 % | 2022 % |
| iPhone | 52.5 | 52.1 |
| Mac | 9.6 | 10.2 |
| iPad | 8.7 | 7.4 |
| Wearables, homes, and accessories | 10.5 | 10.5 |
| Services | 18.8 | 19.8 |
| Total | 100.0 | 100.0 |
With over half of its sales revenue coming from the iPhone, it’s important to understand how the company is performing in the smartphone market, relative to its peers.
Gartner, a management consultancy specialising in the technology sector, regularly reports figures for smartphone market share.
| Apple’s smartphone market share by year | Deliveries (m) | Share % |
| 2017 | 214.92 | 14.0 |
| 2018 | 209.05 | 13.4 |
| 2019 | 193.48 | 12.6 |
| 2020 | 199.85 | 14.8 |
| 2021 | 235.70 | 16.5 |
Again, this appears to be positive news for the American company.
In 2021, Apple delivered a record number of smartphones, beaten only by Samsung.
Time to get a slice of the pie?
In my opinion, there doesn’t appear to be anything fundamentally wrong with Apple. The recent decline in the share price appears to have more to do with fears of a general economic slowdown, rather than any specific doubts about the US technology giant.
But, there are immediate concerns about how the company’s sales will be affected by a downturn in the Chinese economy.
China accounts for 17% of Apple’s sales and most of its products are made in the country. Explaining the importance of China to Apple, Daniel Ives, senior equity analyst at Wedbush Securities, recently described the country as “the heart and lungs of both demand and supply“.
Analysts are expecting sales in the fourth quarter of 2022 to have slowed. This will probably put more short-term pressure on the company’s stock price. At this point, I will take another look at investing in the world’s most valuable company.
