Over the past several months, the self-proclaimed “apes” over at r/WallStreetBets have honed in on a rather unusual target — the most fruitful company in the world by market capitalization — Apple Inc. (NASDAQ: AAPL).
The remarkably well-capitalized tech giant stands out among the crowd of names regularly mentioned on $WSB — a ragtag lineup littered with struggling brick-and-mortar retailers, wildly overvalued movie theater chains, and even the occasional online Viagra dealer.
Apple stock, on the other hand, is arguably the greatest profit-making machine in the history of world commerce. Nearing a $2.5 trillion market cap, the unstoppable behemoth has weathered its recent storms and emerged as the dominating force of the much-lauded FAANG stocks.
Recent price action supports this, as Apple stock has gone on a face-ripping tear since the beginning of June, adding nearly 19% to its already gargantuan valuation. And all the while, the move has been aided by an unlikely ally — the “autists” of $WSB.
Let’s take a closer look at what’s going on with Apple stock. We’ll learn how the company has continued to gain market value, how retail traders targeted the move, and discuss whether there’s still upside remaining for the high-flying tech company.
Table of Contents
All About the iPhone
Once known primarily as a manufacturer of personal computers, the modern era of big tech has seen Apple’s priorities shift to many other areas including (but not limited to) content streaming, film and television production, music distribution, semiconductor manufacturing, and smart speaker design. But Apple’s golden goose remains the same: the iPhone, its single highest-selling product.
You could argue that Apple’s main focus in the post-Steve Jobs era is being the world’s most profitable consumer electronics company, with the iPhone being the center of that focus.
In Q4 2020 alone, Apple sold nearly 80 million iPhones and controlled more than 20% of the global smartphone market. 28 million of these units were sold in the United States, representing staggering 90% quarter-over-quarter growth in the region.
The sales numbers were a major coup for Apple. While the iPhone has long dominated the smartphone market stateside, it has struggled to take the number one spot globally, edged out by Samsung each year since 2016.
But after these stellar fourth-quarter results, the iPhone officially became the highest-selling smartphone worldwide. And even more impressive, it was also the overall best-selling tech device of the year.
If you’d think selling so many expensive phones would lead to huge profits, you’d be right. In Q2 2021, Apple reported astounding revenues of $89.6 billion, up 54% year-over-year.
But record profits alone were never going to woo the crowd at WallStreetBets. Behind the scenes, Apple is developing some projects that could bring the company back to its heyday of product-invention.
Rumors of Apple manufacturing an autonomous electric vehicle have been quietly building for months (if not years.) Online rumor mills have entire web pages dedicated to theories surrounding the highly-anticipated Apple Car.
But in February 2021, reports surfaced that Apple was close to finalizing a deal in which Hyundai-Kia would manufacture the Apple Car at its plant in West Point, Georgia, adding further steam to the gossip machine.
Some may wonder why Apple wants to get into the costly and complicated business of building cars. After all, they’re already making nearly $90 billion per quarter, shouldn’t they be content to keep growing their many businesses that have already proven to make them insane amounts of money? Why try to enter an incredibly complex sector, saturated with competition?
“Because they can, and because they have to,” Chris Gerdes, co-director of the Center for Automotive Research at Stanford University, told Los Angeles Times. Gerdes added that the company possesses “business models that people aren’t aware of,” which sounds eerily like Apple has plans for global domination. Who would’ve thought?
The real target is the time you spend in your car, or as Apple likely sees it, the last remaining waking hours that its customers don’t currently spend using its products. Americans spend a whopping 84 billion hours driving each year — that’s a lot of time (hopefully) spent staring at the road and not at their iPhones. Apple would like to solve this by merging their phones with their cars, and all signs point towards it making an attempt to do so in the near future.
$WSB Takes Interest
At the beginning of June, AAPL began quietly building momentum. Fast forward six weeks later and it’s up nearly 20% as the market cap approaches an astounding $2.5 trillion.
Analysts have started to revise estimates upwards as well. Just this week, AAPL got two major price target upgrades — Morgan Stanley sees shares reaching $166, while JP Morgan is even more bullish, predicting it hits $175.
AAPL has also received tailwinds from a sharp pullback in treasury bond yields, which in turn boosts the value of tech companies with enormous cash fortresses.
Bottom Line: Should You Trade AAPL?
While this may all sound intriguing, you’re probably wondering: Should you trade Apple stock?
On one hand, traders may be wise to wait for some sort of dip in the chart. From a short-term trading perspective, AAPL looks a bit elevated to be starting a new position at these levels.
It’s also important to remember that Apple reports Q3 2021 earnings after the bell on Tuesday, July 27. With this critical catalyst coming so soon, it may be best to wait until after the report to trade AAPL.
On the other hand, simultaneous analyst upgrades are difficult to ignore. These new price targets, coupled with serious bull flow from the renegade scalpers at $WSB, could be all that AAPL needs to continue its ramp and move closer to $200 per share.
If you choose to trade AAPL during this hyped-up rally, do so with caution. Whenever $WSB gets involved, stocks get considerably more volatile. While this can be an experienced trader’s desert-island fantasy, it can spell disaster for newbies who lack discipline.
No matter what happens, watching the tape in AAPL over the next few weeks will be interesting.
Stick to your plan, trade with discipline, and no matter what you do … don’t let FOMO get the best of you.
Featured image editorial credit: mundissima / Shutterstock.com