BCO 224 Financial Markets
Apple is one of the largest technology companies in the global market which operates in different countries, but its headquarter is based in California, US. In this essay, the share price movement of the company in the last four months especially in the last three weeks will be analyzed, and the reasons in the market which are behind the change in the movement of the share price will be identified in this report.
The share price movement of Apple in the last four months meaning period starting from 6th December 2019 and ending on 6th March 2020
Figure 1: Share price movement of Apple in the last four months
(Source: Created by the learner)
The above graph shows the daily movement of the share price movement of Apple in the last four months. From the above graph, it has clear that Apple was experiencing a slow but steady and constant increase in their share price of the company until January in which the company share price remains constant for a short period and then again started to increase until the end of the February when its share price dropped significantly. As it can be seen that most recently, the share price of Apple seen high volatility in the market and this volatility will be analyzed in a more detailed way in the following section.
Share price movement of Apple in the last three weeks meaning period starting from 6th February 2020 and ending in 6th March 2020
Figure 2: Share price movement of Apple in the last three weeks
(Source: Created by the learner)
The last three weeks’ share price movement trend shows that the share price of Apple has remained stable till the end of February when the price of the share price began to drop significantly and constantly until the end of February when the company share price started to increase again. Although, this increase stayed till the 2nd of March and then from the 3rd of March, the price of the share again started to drop in one day and then increase the other day resulting in high volatility in the stock movement of the company. Then in the last two days of this three week period, the company show pattern of constant decrease. There are some market factors result and some company factors responsible for the change in the movement of the share price of the company. These factors have been identified and will be discussed in the following section.
The reason for the stock price movement of Apple in the last fourth months
The reason for the constant growth of Apple at the beginning of this four-month period is the strong fundamental factors of the company which was indicating high growth of the company in 2020 also. This prediction of the expert of the high growth of the company in the upcoming period is linked with the company's upcoming different technology development announcement like mini LED screen technology developments in its products like iPads or laptops. Also, another reason for the high growth forecast of Apple is the success and high growth of its wearable business which includes sales of the products like Airpods or Apple Watch in 2019 (Kovach, 2020). This high growth of its wearable products is expected to continue in 2020 also. It is one of the main reasons that the share price of Apple was continually increasing at the beginning of the period.
Then the reason for the share price of Apple remains constant from the middle of January 2020 for a short time and then again started to increase for a short time is the early news of the Corona Virus outbreak which is although being downplayed by Chinese Authorities. Still, different experts in the global news started to give a more severe report about it. This lead to some investors being wary of the market but some investors having faith in the strong fundamental of the company and did not think this will have any long-term effect on the company. Therefore, this neutralized the situation and the share price remain constant and then again started to increase due to this strong faith in Apple by its investors.
Then the reason for the sudden decrease in the share price of the company from the end of February 2020 is the health crisis in China to the outbreak of the Corona Virus in that country. This outbreak in China which has eventually led to the lockdown of the Hubei province of China from 23rd January 2020, which has continued till now. This affected the supply chain of Apple significantly as due to this outbreak not only the company has to shut its Apple stores across China, but its supplier called Foxconn has to stop its manufacturing operation due to this outbreak. All these factors lead to the investors in the markets panicking more than before, and this lead to a constant high decrease in the share price of the company as the market predict financial crisis happening in the global market very soon due to this outbreak impacting not only China which second-largest superpower in the world but this outbreak eventually spreading to other countries and effecting the overall global market.
Then the reason for the company high volatility in the share end of these four months is investors of the company again becoming to feel confused about how Apple will do business in the near future as Coronavirus keep on spreading all over the world leading to an increasing number of death outside china in countries like Italy or Iran and showing sign of becoming pandemic. Another worrying factor for the market is the increasing number of coronavirus cases being identified in the US. On the other hand, the response of the senior management of Apple including its Chief Executive Tim Cook has been mostly positive like Tim Cook talked about its near-future expansion plan in developing countries like India or the company giving paid leave to its staff who has found to be having coronavirus symptoms. Therefore, the investors in the market is reviewing the day to day activities of the company in the market and the increase and decrease in the stock price of Apple in the current time depending on the fact whether the company internal good news is able to overcome the bad news which is coming from different global market due to coronavirus outbreak. Therefore, this lead to increase and then decrease pattern in the share price of the company. In the following section, more detailed inspection is being done about analysis will be done about the reason for the changes in the share price of Apple in the last three weeks.
The reasons for the stock price movement of Apple in the last three weeks
The first trend which has been identified is the constant till the end of the February which is due to the fact that the investor were not thinking that this outbreak can be successfully mitigated by Apple. These beliefs stay largely till the end of February 2020 and then the investors of the company started to become uncertain, then started to review day to day activities of the market and the company to decide whether to invest more in the company or pull out of it or should it hold its position. Then some of the events in the last few days of this three weeks period impact the market severely like crude oil price fall or lockdown on the part of Italy due to this coronavirus disease. Although, OPEC tries to compensate for the negative effect of the coronavirus on the international oil price by reducing it supply the investors in the market does not feel it will likely offset the overall negative effect of this outbreak from the market. Also, it becomes increasingly evident that US healthcare system is not ready to handle the pressure which Coronavirus will have on its healthcare system, and this impacts the share price of Apple significantly as the company's domestic market is the US. These are the reasons for the change in the share price of the company in the last three weeks.
Kovach, S. (2020). Apple's story is shifting thanks to the massive success of AirPods. Retrieved 10 March 2020, from https://www.cnbc.com/2020/01/08/apples-story-is-shifting-thanks-to-the-massive-success-of-airpods.html