It’s been a wild few months for the markets in general but the tech sector has been particularly rocky, thanks to privacy scandals and fears of looming regulation.
But in reality, all that discontent makes for a great buying opportunity, says Scott Bauer of Prosper Trading Academy.
Last week, shares of industry giant Apple Inc. (NASDAQ:APPL) took a hit on news of slumping iPhone sales, losing seven per cent of their value on Thursday and Friday alone and erasing over $60 billion from the stock’s market cap. The reaction was related to lowered projections for iPhone sales in the quarter ending in March as well as for the current quarter from Morgan Stanley, who estimate a decline in FY18 shipments from 217 million down to 210 million.
“We believe the June quarter consensus iPhone shipmetn estimate of 42.9 million could be revised meaningfully lower to account for weak supply chain data points and continued weakness in China,” said Morgan Stanley analyst Katy Huberty on Friday.
Lowered estimates or no, the dip in tech stocks could mean they’re entering buying territory, says Bauer, CEO of Prosper Trading.
“I do think that tech —Apple, Nvidia and some of these other ones— are probably approaching those areas right now, even ahead of earnings, where you may want to start dipping in your toes,” Bauer told BNN. “You look at Apple and over the last 18 months, every time we see a decline like this, you just close your eyes and you buy it and it has worked out. I’m not saying that’s the best strategy in the world, but that’s certainly the trend.”
Facebook’s share price has bounced back somewhat over the past month, ever since privacy concerns took centre stage for the social media company, while shares of Google’s parent company Alphabet have risen seven per cent since late March. Shares of Canadian tech company Shopify Inc. lost over a quarter of its value in trading over the past month.
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“I wouldn’t say it’s a complete rollover yet. We haven’t seen the pain that we’re seeing in Apple and a couple of the others right now in some of the other big names,” says Bauer. “We’ll see what happens with Google earnings early next week. But there’s definitely some tension there, some risk, and that’s why you’re starting to see some of that volatility creep back up.”
“I think that tech right now is really ripe for the picking,” says Bauer. “The key now for this marketplace as it has been for the last couple of months is not to overreact, because everyone is jumpy. The market moves are so jumpy these days, even with the volatility index lower than it was a few weeks ago.”