An AAPL a day keeps the profit away

Before we begin, I realize that betting against Apple has, historically speaking, been about as smart as challenging Mike Tyson to a slap fight. But supposedly invincible giants stumble, 50 year old lamps fail, and Mike Tyson can’t even knock out some youtube fratboy. I can’t help but feel a nagging suspicion that Apple might not be as bulletproof as its fans believe. If you’re holding AAPL like a golden ticket to Wonka factory, then hear me out…

The Technical Argument

Apple is midway through a contraction period. The last 3 pivot highs have been coming in lower and lower (lower highs). And the last 4 lows have followed the trendline in place. A consolidation like this can easily lead to a breakdown in the stock, and as with any position, using a fixed risk and high reward is the way to play something like this. More conservative traders would wait until the trendline is breached before entry. Otherwise, something like a long put, put vertical, or even a bearish butterfly would do the trick. And now for the argument as to why we should be short in the first place…

Have They Peaked?

Remember the days when every Apple keynote felt like Christmas morning? When Steve Jobs would come out in his black turtleneck and blow our minds? Yeah, those days are gone. I mean, what’s the big headliner now? A slightly better camera and maybe a new shade of beige? (It’s not beige, it’s “matte sand”) It feels like we’ve hit peak iPhone. Sure, the iPhone 15 has its bells and whistles, but does it really justify the eye-watering price tag?

The fact is, the smartphone market is saturated. Growth has been slowing down, and people aren’t upgrading as often. In emerging markets, cheaper alternatives from companies like Xiaomi and Oppo are taking market share, and outside of incremental updates, Apple hasn’t given us a true game-changer since Jobs took his last bow.

AirPods? Nice, but not revolutionary. Apple Watch? A decent fitness tracker that tells time. Apple Vision Pro? It’s innovative, but at $3,499 a pop, they’re pricing out anyone who isn’t a tech bro or a venture capitalist. Apple needs another earth-shattering product, and I just don’t see one on the horizon. Frankly, I’m keeping my fingers crossed for the iHeart. Heart attack? Stick a USB3 in your chest and you’re back in business! Unless you left your brick in your laptop bag again.

China: An abusive relationship

And then there’s China. It’s no secret that Apple depends on China for both manufacturing and sales. Roughly 20% of their revenue comes from Greater China. And the geopolitical landscape is becoming (more of) a minefield.

The Chinese government has already banned iPhones for state employees, and anti-American sentiment is bubbling beneath the surface. It’s not impossible to imagine a future where Apple faces regulatory crackdowns or tariffs (in case you’ve been sleeping, tariffs are the new hot thing these days) that eat into its profit margins.

Then there’s the supply chain issue. With growing tensions between the U.S. and China, Apple’s reliance on Chinese factories is a vulnerability. Sure, they’re trying to diversify by moving some production to India and Vietnam, but that’s a logistical nightmare that could take years to fully implement. Imagine trying to move out of your house and getting another place down the road while keeping half your stuff in the other house. If you were successful in imagining that, you’re probably divorced. In the meantime, they’re still at the mercy of Chinese factories/ex-wives.

Services Growth: Slowing Down

One of the more common bullish arguments is that Apple is pivoting to services—App Store sales, Apple Music, iCloud, Apple TV+, and so on. And yeah, it’s been a fantastic growth story… until now.

The App Store, which is the crown jewel of their services revenue, is under fire from regulators around the world. The EU has already forced them to allow third-party app stores, and you can bet your last dollar that other countries will follow suit. If developers can bypass Apple’s 30% cut, that’s a significant revenue stream at risk.

Meanwhile, let’s talk about Apple TV+. I don’t care how many Emmys they win; they’re burning cash faster than a gambler in Vegas. Competing with Netflix, Disney+, and Amazon Prime is no small feat, and I’m skeptical they’ll be able to turn a profit any time soon. Frankly, this trader doesn’t even know what’s on Apple TV+. Hell, I don’t even know what’s on Apple TV-regular. But I know I’m in the minority there.

Competition: The Empire Strikes Back

Apple’s wall has always been sheer, non-porous, covered with oil, and surrounded by hungry crocodiles swimming in a moat of cyanide. Once you the customer are in that ecosystem, it’s hard to get out, and any competitor trying to steal market share has to get IN. I see it all the time—folks writing on a MacBook, while their iPhone sits next to them, buzzing with notifications from their Apple Watch. If AAPL started selling coffee, then they’d really take over. But competitors are getting wise.

Samsung’s Galaxy phones are arguably just as good, if not better, in some respects. Google’s Pixel line keeps getting better with AI-driven features that Apple is lagging behind on. And then there’s the wildcard: Chinese manufacturers who are undercutting Apple on price while closing the gap in quality.

Apple’s iOS used to be the biggest selling point, but Android has matured significantly. The app gap is nonexistent now, and customization options on Android make iOS look like a control freak’s paradise.

Valuation: Priced for Perfection

Here’s the thing: Apple’s valuation assumes everything goes right. They’re trading at a price-to-earnings ratio of around 30, which is historically high for a hardware company. The market is pricing them like a high-growth tech stock, but their revenue growth is slowing.

Warren Buffett loves Apple because of its “moat” and brand loyalty. And he’s not wrong. But even the best brands eventually hit a ceiling. Despite their latest efforts at Diet Licorice Strawberry Pie Sprite, Coca-Cola isn’t growing like it did in the 80s. It’s possible Apple is reaching that point.

Buybacks and Financial Engineering

Apple’s massive share buybacks have been a boon for investors. It’s been one of the primary reasons the stock keeps hitting new highs. But how long can they keep this up? At some point, you can’t keep buying your way to higher earnings per share. If revenue growth stalls, those buybacks won’t be enough to justify the stock’s lofty valuation.

The Bottom Line: Apple Is No Longer Cool & Edgy

Apple is the 26 year old going to high school parties. He’s the dad that’s trying to be cool by using the word “Skibidi.” I’m not saying Apple is going to crash and burn. They’re a cash machine with a loyal customer base. But the narrative of perpetual growth is looking shaky. Innovation has stalled, competition is fierce, geopolitical risks are mounting, and their valuation is pricing in a flawless future.

If you’re an Apple bull, that’s fine. Just don’t forget that trees don’t grow to the sky. At the very least, consider hedging your bets. As any seasoned trader knows, the bigger they are, the harder they fall—and Apple is as big as they come.

And hey, if I’m wrong, at least we’ll still have the best camera phones for taking selfies while crying over our losses.