Consumers can't get rid of their Apple Vision Pro headsets fast enough... at least, that's what a recent wave of headlines would have you believe.
The Vision Pro is a new virtual-reality device from Apple (AAPL). It packs immersive sound and video into a $3,500 headset. And it lets users access their apps and programs in a three-dimensional space.
Tech media outlets are now declaring the Vision Pro dead on arrival. But the articles all have a suspiciously similar theme. Take these two recent headlines...
- From Gizmodo: "Tech Bros Are Returning Their Vision Pros and Keeping Receipts"
- From Business Insider: "Apple Users Are Rushing to Return Vision Pro"
This narrative popped up across various publications and social media outlets this month. But there's a simple, boring truth behind the clickbait...
Apple offers a standard 14-day return policy for its products. So some early adopters just returned their Vision Pros within those first two weeks (when they could still get a refund). And with a few exceptions, retail stores are reporting around average return rates.
The story for investors is much more interesting, though...
You see, the media's negative spin is now shaking some Apple investors out of the stock... And this knee-jerk reaction is setting up a rare contrarian buying opportunity.
The Apple Vision Pro release didn't do Apple's stock price any favors...
Preorders for the headset opened on January 19. The stock peaked two trading days later... And it has fallen more than 5% since then.
But a rare pattern has emerged in the drawdown. AAPL share prices just fell for six consecutive trading days – twice. Take a look...
Apple's share price almost never falls for six days uninterrupted. There have only been 31 similar falls since 1990. And now, we've seen two in a row.
I wanted to know what this decline meant for the future. So I tested every time AAPL fell for six days and measured forward returns for three-month, six-month, and yearlong time frames.
Again, this kind of six-day plunge in AAPL is rare. But historically, these dips serve as great buying opportunities. Check it out...
Apple is one of the best companies in the world. It has returned about 21% a year on average for the past 34 years.
But after six days in the red, its stock does even better. This kind of price action has resulted in an average return of 9% in three months, 17% in six months, and 26% after a year.
What's more, history says there's a strong risk-reward setup when AAPL flashes this signal...
The average return in a positive year was an incredible 75%. And the average drawdown in a negative year was a sizable (but smaller) 26%.
Plus, the odds are in buyers' favor after a six-day drop. Apple's stock finished the year in positive territory in 58% of cases after this signal... enough to give the bulls a statistical edge.
The media is quick to bad-mouth new, disruptive products like the Vision Pro. But the headset debuted only a few weeks ago. It's far too soon to bet against Apple based on this new tech alone.
Instead, contrarian investors should celebrate the recent sell-off in Apple shares...
The market just offered a discount on one of the world's best businesses. So if you've been waiting to scoop up shares of the tech giant, now might be your moment to do so.
Good investing,
Sean Michael Cummings
Further Reading
Artificial intelligence ("AI") has boomed in recent years. But like anything, progress comes with a price. Companies must now protect themselves from AI-related crimes. And that spells opportunity for one crucial sector... Read more here.
Political clashes happen on social media all the time. But one social media titan has decided to curb its "rage baiting." This is a surprising move ahead of the presidential election. But one time-tested system shows this change won't hurt the company's stock... Learn more here.
HIGHS AND LOWS
NEW HIGHS OF NOTE LAST WEEK
Booz Allen Hamilton (BAH)... "offense" contractor
General Dynamics (GD)... "offense" contractor
Visa (V)... payment-processing giant
JPMorgan Chase (JPM)... financial giant
American Express (AXP)... financial giant
Amazon (AMZN)... online-retail king
Meta Platforms (META)... social media giant
Nvidia (NVDA)... chip giant
Dell Technologies (DELL)... laptops and PCs
Garmin (GRMN)... GPS and wearables
Spotify Technology (SPOT)... audio streaming
Boston Scientific (BSX)... medical devices
Abbott Laboratories (ABT)... health care giant
Merck (MRK)... pharmaceuticals
Procter & Gamble (PG)... consumer goods
Costco Wholesale (COST)... membership-only stores
Home Depot (HD)... home-improvement products
Sherwin-Williams (SHW)... paint
Toyota Motor (TM)... automaker
Ferrari (RACE)... luxury cars
General Electric (GE)... manufacturing
NEW LOWS OF NOTE LAST WEEK
Wendy's (WEN)... burger (and Frosty) chain
Avis Budget (CAR)... rental cars
Sasol (SSL)... chemicals
