Apple Watch Overreaction Buying Opportunity?

I don’t like giving short-term stock trading advice, because all of the wrong people end up taking it. Let’s start from the beginning. If you don’t have $100,000 of investable assets in a trading account (not counting 401k, IRA, or other long-term savings accounts), you have no business buying individual stocks of any kind. The ability to make a profit with small stock buys is severely limited.

Buy Apple Stock on Watch News

Apple recently announced the Apple Watch 3. The big deal for the Apple Watch 3 is that it can connect directly to cellular networks on its own without you having to have an iPhone to connect it to. This is another step in the direction of the watch itself replacing your phone, but for now, it’s mostly a novelty that appeals to Apple technology enthusiasts.

apple watch 3 problems

Recent reviews have indicated that there are some issues with the Apple Watch connectivity. As a result, Apple stock is down over 2% today. This is a major overreaction, and a buying opportunity if you are looking to invest in Apple shares.

The problem, is that the watch connects to Wi-Fi networks that do not have internet connectivity. This is the communication equivalent of driving into a dead end street. The watch thinks it is connected, but it can’t get to any actual data.

Why Apple Watch Problems Are a Buy

The severe downturn in Apple stock based on this new is a joke. The reality is that the Apple Watch is not going to be a big seller anyway, not like the new iPhone models will be. The point of the watch is to continue building the technology so it’s ready when the market is there, not to generate big revenues. Apple Watch revenues are largely inconsequential to Apple’s bottom line, so a problem with the watch simply isn’t that big of deal.

Even if the Apple watch was important to Apple stock, this is still a dumb move by the markets. Remember, the Apple Watch isn’t even out yet. Some reviewers have it, and pre-orders are available, but no watches are out in the wild yet. The fix, for this issue is a software fix, not a hardware problem, so all Apple has to do is correct the issue before watches start shipping, something it is sure to do.

The end result is that this watch thing will be fixed before it is a real issue that could actually hurt Apple’s financials.

The stock has been trading down since the iPhone announcement on September 12. That is in part from some disappointment in the offerings, but the reality is that, as always, Apple iPhone sales will be driven by Apple fans, who will buy either the iPhone 8 or iPhone X as soon as possible, and every major cell phone company is already pushing iPhone pre-orders.

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If your research tells you that Apple stock is overpriced, and that expectations are too high, that’s a reasonable position, and I’m not contradicting that. However, if you thought Apple was a buy before today, then today’s news is a joke, and a chance to get in on a dip.

This article is for general informational purposes only and is not a recommendation to buy or sell stocks. For advice on your specific investments, contact your financial professional. As of the publication of this article, the author owned shares of Apple stock, however, that may change at any time without prior notice.



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