Stocks to sell

Apple’s Rotten Core: 3 Reasons to Dump AAPL Stock Now

The renowned iPhone maker, Apple (NASDAQ:AAPL) stock, has continued to see its share price slump. Currently, Apple’s stock has fallen more than 10% since the start of the year. This puts the iPhone maker at odds with some many other Big Tech stocks that have enjoyed this year’s broad rally.

Apple’s deteriorating appeal with investors is no mystery at this point. Specifically, the iPhone-maker’s end-markets are oversaturated, and the company has no clear diversification strategy. The company’s fourth-quarter report for 2023 saw revenue decline by 1% year over year.

Here are three reasons to dump your AAPL stock shares and move elsewhere.

Apple’s China woes intensify

The Chinese market, which accounted for about 18.9% of Apple’s revenue at the end of fiscal year 2023, has continued to give the iPhone maker a difficult time with the surprising return of Huawei. In September of last year, Huawei launched the Mate 60 Pro with a 7nm SoC, leading Chinese consumers to favor it over the new iPhone amidst geopolitical tensions. According to analysts at the investment bank Jefferies, Apple had already started to lose its dominant position in the world’s largest market for mobile handsets after the launch of the new Huawei handset.

Apple’s sales decline in China has only intensified in 2024. According to Bloomberg, for the first 6 weeks of the year, Apple’s iPhone sales declined 24%. This means the iPhone maker’s market share shrunk by 7%, while Huawei significantly increased its own market share.

The Apple Car will not be launched after all

The problem that has plagued AAPL stock for some time now is its lack of a diversification strategy. Despite Apple’s attempts to grow its services segment, encompassing iCloud, Apple Music, Apple News, and Apple TV+, it has been unable to compensate for the decrease in hardware sales. The company’s services segment only grew by 9% in 2023, compared to 14% in 2022. Apple has also failed to enter new markets or create new products that could generate significant revenue streams.

Most recently, the iPhone maker decided to shelve its self-driving Apple Car project after pouring $1 billion a year into it. The company cited technical difficulties and the costly economics of creating an automotive business.

Wall Street softens on Apple’s Stock

According to Bloomberg, AAPL stock was, as of recent, removed from Goldman Sachs‘ list of top buys. Since this list was released last June, Apple has always ranked on it, but now that has even come to end. The iPhone maker’s lack of meaningful growth prospects has much to do with it.

Moreover, 15 Wall Street firms have given Apple a “Hold” rating while 4 have rated the stock “Sell” or “Strong Sell”. While the majority of firms remain moderately bullish on the company’s shares, the stock has certainly begun to fall out of favor.

On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Tyrik Torres has been studying and participating in financial markets since he was in college, and he has particular passion for helping people understand complex systems. His areas of expertise are semiconductor and enterprise software equities. He has work experience in both investing (public and private markets) and investment banking.

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