Tesla (NASDAQ:TSLA) and Apple (NASDAQ:AAPL), two of the five largest and most popular businesses in the S&P 500, are the only two equities that better represent the risk-taking mentality of investors than any other pair of stocks. And there is no other pair of equities that better exemplifies investor aversion to risk than they do right now.
Apple Stock (AAPL) Performance vs Other Stocks
Apple stock (NASDAQ:AAPL) is the most widely held stock in the S&P 500. Its name and symbol best exemplify the concept of safety more than any other stock. And up to August 17, it had behaved in this manner, with the stock declining by only 1.7% compared to the 10.3% decline that the S&P 500 experienced. It had also outperformed the rest of the major technology companies, including Amazon AMZN (AMZN), Alphabet (GOOGL), and Microsoft (MSFT), which were down 15%, 17%, and 13% respectively.
But a great deal has shifted since the high point in August. All three of Apple, Amazon, and Microsoft have had double-digit percentage drops in their stock prices. In other words, Apple is just another stock in the technology industry.
What is different? The past several weeks have been extremely busy for Apple (NASDAQ:AAPL), contributing to the stock’s decline. It all started in early September when the firm presented its newest range of products, which included the iPhone 14, to the public for the first time.
At first, there were indications of a significant interest in purchasing the phone, particularly the more costly Pro and Pro Max editions. Then, further information concerning the demand for iPhones started to trickle in. A research analyst from Jefferies pointed out that new information led him to assume that the demand for the iPhone 14 in China was not as great as was anticipated. Then, Bloomberg reported that Apple (NASDAQ:AAPL) canceled plans to increase iPhone 14 manufacturing later this year due to weakening demand. An analyst from BofA Securities lowered the stock from Buy to Neutral, citing this development as the reason. While it is still performing better than the S&P 500 and other major technology stocks this year, it is making every effort to either catch up or fall behind.
On the other side, Tesla (TSLA) exemplifies investors’ appetite for a risky wager that will provide a profitable return. Elon Musk, the corporation’s chief executive officer, is now the wealthiest person on the planet and has received a great deal of media attention due to a legal dispute with the sale of the social media network Twitter (TWTR). As of August 17, the stock performed far better than Amazon, Alphabet, Microsoft, and even Apple. By September 30, it had a decline of only 13%, more than 6 percentage points less than its closest competitor, Alphabet.
On Monday, everything started to turn around. Tesla stock dropped 8.6% after the company reported on Sunday that it had delivered 343,830 cars and produced 365,923 in the third quarter. This was an increase compared to the 254,695 vehicles that Tesla handed over to customers in the second quarter. However, it was still below the estimates provided by Wall Street. According to Wall Street, the gap was caused by logistical issues rather than something more fundamental. On the other hand, one may argue that investors are worried about the demand for electric vehicles because there is a delivery shortage of around 14,000 to 15,000 units.
Neither Tesla nor Amazon is immune to the larger market circumstances, and the markets have suffered this year. However, these two companies have been very successful. The decline in stock prices can be attributed to worries of an impending economic downturn and concerns regarding an overly aggressive interest rate hike by the Federal Reserve. The Nasdaq Composite has experienced a decline of 31% this year and a drop of 17% since August 17.
And that was something that not even Apple or Tesla could hold up against.
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