Apple stock fell 6.6% on Wednesday following a sharp after hours decline Tuesday evening. The company reported an earnings announcement that beat the street's expectations but the focus was, and continues to be on the slowing iPhone sales. Today we will take a closer look at the monster balance sheet of Apple as well as some technical analysis for the short term. Fundamentals: There is no question that cash is king, and Apple is the king of cash. The chief executive Tim Cook even commented in his shareholders call that Apple has "the mother of all balance sheets". Everyone likes to marvel at the cash Apple has and how they could buy Tesla, or go on a buying spree and gobble up many of their 2nd tier competitors. The problem is they really cant do this nor will they. Apple has roughly $215 billion in cash and equivalents on its balance sheet as of its latest quarterly report. The issue, which many politicians are learning, is that even those who have the most cash cant buy votes (or customers in Apples case). Especially when you cram a new version of the same product down your customers throat seemingly every few months.
Another thing that many investors forget is that Apple has most of this "Cash" overseas. Tim Cook himself has said many times that there is no way he brings the cash back to the states and pays a 40% tax. Nothing wrong with that, and not many would argue with him.
Here's the real issue: While all this cash is sitting overseas Apple's debt is creeping up in the states. Many analysts have questioned this in the past, but strong sales and blow out quarters have pushed the concerns to the sidelines. Until now. Apple currently has roughly $53 billion in long term debt as well as $32 billion in "non-current liabilities" (just a fancy balance sheet term to account for the series of bond sales that the previously held). Also, remember that Apple pays its dividends through the sale of bonds (this way they don't have to bring back the cash from overseas).If sales continue to slow, expect that analysts and investors will push this topic harder with Apple.
Now on a lighter note, Apple has the most loyal, premium customer base in history and the company continues to squeeze more and more out of them. Any new product is always met with long lines and no shortage of buyers. Time will tell if Apple gets pushed out of the growth stock category.
Technical Analysis: Technical traders continue to promote a discounted Apple stock. The issue is that with the weakness in the overall market as well as Apple concerns the discount continues to increase. The 20% drop over the last quarter has many short term trader licking their chops and even many analysts have come out with strong buy ratings at these prices. Technical traders recognize support in the mid $80's as another buy opportunity. While bottom picking has been difficult, there is no technical reason to believe that Apple has seen its best days.
