Apple
stock doesn’t typically have the jolliest of holiday seasons. But this December might be different for shares of the iPhone maker.
Since 1981, December ranks as the third worst month for
Apple
stock, according to Dow Jones Market Data. The stock has an average return of 1.5% in December, which is better than the 4.3% historical decline in September, its worst month, but not close to the 6.4% historical jump in October, its best month.
The move is about in line with the historical gain of 1.3% for the
S&P 500
in December over the same time frame.
The weaker December performance has become a stronger trend over the past decade, too. Apple stock has averaged a decline of 0.9% in December over the past 10 years versus a drop of 0.3% over the past 20 years.
Over the past 10 years, the S&P 500 averaged a decline of 0.1% in December, while it has averaged a gain of 0.9% for the month over the past 20 years.
Even though the stock doesn’t perform as well in December as it does in other months, it’s an incredibly important month for Apple, with the company’s fiscal first quarter—its December quarter—regularly producing the strongest revenue performance. The first quarter in fiscal 2022 brought in $117.2 billion. Analysts surveyed by FactSet expect Apple to bring in $118.1 billion revenue for fiscal 2024’s first quarter.
Wedbush analyst Dan Ives rates the stock as Outperform with a $240 price target, which implies a 26% increase to the stock’s current price. Ives told Barron’s on Friday that the holiday quarter is Apple’s Super Bowl.
“It is their most important quarter in the most important month because of the amount of iPhones that get bought from Black Friday through Christmas,” Ives said. He also added that the reason the stock doesn’t perform as well in December, despite the month’s significance, is because most of what has happened during the year is already priced into the stock.
This December could be a solid one, though, especially compared with last year. Apple stock fell 12% in December 2022 as the company struggled with major supply issues at its iPhone facility in Zhengzhou. While analysts have reported that Apple is facing some supply constraints this year, it is nowhere near as bad as it was in 2022.
“The China Covid constrains a year ago—it was the Grinch for holiday season in 2022. 2023 is a much more normal holiday season for Apple and there have been no cuts around production, which is a very positive sign heading into Christmas,” Ives said.
On top of improved supply, Ives said he believes Apple has seen a relatively steady demand environment for the iPhone 15.
“25% of the install base has not upgraded their iPhones in four plus years, and it’s the most loyal install base of any consumer tech company around the world,” he said. “When you have 1.2 billion iPhones worldwide and 250 million of those are not upgraded, that sets up for an eat the popcorn moment getting ready for this next cycle to take hold.”
Write to Angela Palumbo at [email protected]
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