Jim Cramer Predicts This Has to Happen for Apple's Stock to Not Struggle


 
 
05:39 01/11/2019

Tech giant Apple stunned Wall Street when it slashed its outlook earlier this month in a letter from CEO Tim Cook to investors, citing weak iPhone sales and economic factors.

“If you look at our results, our shortfall is over 100 percent from iPhone and it’s primarily in greater China,”

Cook remarked to CNBC's Josh Lipton on January 3rd. He added, “It’s clear that the economy began to slow there for the second half and what I believe to be the case is the trade tensions between the United States and China put additional pressure on their economy.”

CNBC's "Mad Money" host Jim Cramer thinks one of two things needs to happen for the company to not struggle.

According to Cramer, there needs to be a pickup in iPhone sales or growth in the company's service business to put the stock back on course. Cramer explained, "As long as iPhones make up more than 60 percent of Apple’s sales,” Apple’s stock will “stay mired at this level."

“As long as iPhones make up more than 60 percent of Apple’s sales, Wall Street will only care about the razors, not the razorblades,” Cramer said on his show this week.

“That’s why I expect Apple’s stock will stay mired at this level, either until the phone biz picks up again or the service biz grows to the point where it can no longer be ignored,” he added.

Cramer also noted that to request an electrocardiogram from your doctor can be “kind of a hassle,” but buying electrocardiogram-equipped Apple Watch isn’t.

“That, right there, within the span of 10 minutes, is why Apple’s such a conundrum. If you want an EKG, the Apple Watch is better than going to the doctor’s office because you’re constantly wearing it so you get a more accurate reading,” Cramer said.

It was this week that the Mayo Clinic’s head of cardiovascular medicine told CNBC that it was using artificial intelligence to predict heart failure using patients’ electrocardiogram readings.

“Of course, I don’t expect this story will move this stock, not right now. Not even anytime soon,” Cramer warned. “Until then, ... the stock will trade on every little data point that gives us some insight into the iPhone hardware sales.”


This article has been provided by a Chasing Markets contributor. All content submitted by this author represent their personal opinions, and should be considered as such for entertainment purpose only. All opinions expressed are those of the writer, and may not necessarily represent fact, opinions, or bias of Chasing Markets.
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