Apple’s 6.5% Risk
By Tue, Aug 25, 2020
Hey Scoopers,
The FDA gave investors a new hope for possible COVID-19 treatment, and investors liked what they heard. — More on that in the “Overall Market” section.
Beyond the overall market, we’ve got one unexpected COVID-19 winner and one surprising COVID-19 loser stock. — More on that in the “What’s Up?” and “What’s Down?” sections.
Oh, by the way, Apple is now a risk to the entire market. — More on that in the “Water Cooler” section.
But, first, here is a recap of what happened in the market yesterday:
Market Recap
- U.S. markets: All three indices started the week in the green. Scroll down to the “Overall Market” section to read more.
- Cryptocurrency: Bitcoin’s price continued to struggle to break above the $12,000 threshold.
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Thank You, FDA!
Renewed hopes for a possible COVID-19 treatment rallied the market once again. On Sunday, FDA issued an emergency use authorization for convalescent plasma as a potential treatment, and the market loved the news. All three indices finished Monday in the green.
A Surprising Winner
So, what happened?
Shares of Zillow (Ticker: ZG) are up more than 80% since the start of 2020. This company is a surprising winner of the COVID-19 race. At the beginning of the year, no one could have expected such a big win for Zillow. The company was struggling with its home-flipping business, and the advertising revenue from real estate agents wasn’t enough to excite investors. However, COVID-19 helped the company in two unexpected ways:
- The interest rate cut brought a wave of interest in home buying.
- Work-from-home and social-distancing forced people to use Zillow to find and tour homes without actually visiting them.
It would be interesting to see whether Zillow can keep growing after the pandemic. For now, and as long as there are enough people with a job and a salary to afford a new mortgage, Zillow and similar platforms would most likely do just fine.
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An Unexpected Loser
So, what happened?
Shares of CarGurus (Ticker: CARG) were down by more than 23% since the start of the year. The initial expectation was that people would need to buy more cars, especially second-hand cars, because they wouldn’t trust public transportation for a while. CarGuru is “an online automotive marketplace connecting buyers and sellers of new and used cars.” However, the company’s management isn’t as enthusiastic about 2020’s potential. It seems the impact of the COVID-19 pandemic on the overall automotive market would also influence CARG’s short-term potential.
Apple’s Risk
So what happened?
Folks, today’s Water Cooler section is a cold glass of water we hope to pour over Apple’s (Ticker: AAPL) excitement. Sorry to do this to you, but we are committed to giving you a balanced view of the market in all ways possible.
Here are two reasons for our dose of pessimism:
- The jump from $1 trillion in market valuations to $2 trillion happened in less than a year. It took Apple 40 years to reach $1 trillion. Nothing has improved that much for Apple in less than a year to reach $2 trillion in less than a year.
- Apple now has more than a 6% share in the S&P 500. Any possible misstep, any small bad news that rattles Apple, would send the whole market shaking.
Enjoy your unexpected return if you are invested in Apple, but stay cautious, if you are not an Apple investor.
Our email address is members@tradestocks.com. Let us know if you have any questions, feedback, or ideas.
Disclosure: Authors of this Scoop own shares of Apple (Ticker: AAPL).
About the Author
The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card
