How Apple Stock Can Crash?
Apple (AAPL) has stumbled before. Its stock plunged more than 30% within a span of less than 2 months in 2018, wiping out billions in market value, and erasing massive gains in a single correction. If history is any guide, AAPL stock isn’t immune to sudden, sharp declines.
Specifically, we see these risks:
- Earnings Quality Decay: Divergence of Cash Flow from Net Income
- Executive Exodus & Governance Risk: C-Suite Turnover
- Margin Compression from Intensifying Regulatory and Competitive Pressures
Risk 1: Earnings Quality Decay: Divergence of Cash Flow from Net Income
- Details: Eroding investor confidence in reported earnings, Potential for significant downward EPS revisions,
- Segment Affected: Company-Wide Financial Reporting
- Potential Timeline: Next 1-2 Quarters
- Evidence: Operating cash flow declined 5.73% in FY 2025, despite a 19% increase in net income (FY 2025 10-K), Accounts receivable jumped 10.14% year-over-year, outpacing revenue growth (Q3 2025),
Risk 2: Executive Exodus & Governance Risk: C-Suite Turnover
- Details: Loss of strategic continuity and institutional knowledge, Heightened uncertainty surrounding financial stewardship,
- Segment Affected: Corporate Governance & Financial Oversight
- Potential Timeline: Immediate
- Evidence: Long-tenured CFO Luca Maestri stepped down, effective Jan 1, 2025 (August 2024 Announcement), Cluster selling by top executives including the new CFO, CEO, and COO in late 2025 (October & November 2025 Form 4 Filings),
Risk 3: Margin Compression from Intensifying Regulatory and Competitive Pressures
- Details: Gross margin erosion from pricing pressure and rising costs, Multiple contraction due to slowing growth in high-margin segments,
- Segment Affected: iPhone & Services
- Potential Timeline: Throughout 2026
- Evidence: Samsung citing significant margin pressure from rising component costs in its mobile division (Q4 2025 Earnings), New risk factor language in 2025 10-K regarding risks from new technologies like AI and complex, evolving global laws (October 2025 10-K),
What Is The Worst That Could Happen?
Looking at Apple’s risk during major market shocks tells an important story. It plunged 80% in the Dot-Com crash, 61% in the Financial Crisis, and about 31% in the recent inflation shock. Even smaller sell-offs like 2018 and the Covid slump saw dips close to 30%.
But the Stocks fall even when markets are good – think events like earnings, business updates, and outlook changes. Read AAPL Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
Is Risk Showing Up In Financials Yet?
- Revenue Growth: 6.0% LTM and 1.8% last 3-year average.
- Cash Generation: Nearly 23.5% free cash flow margin and 31.9% operating margin LTM.
- Valuation: Apple stock trades at a P/E multiple of 39.2
| AAPL | S&P Median | |
|---|---|---|
| Sector | Information Technology | – |
| Industry | Technology Hardware, Storage & Peripherals | – |
| PE Ratio | 39.2 | 24.1 |
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| LTM* Revenue Growth | 6.0% | 6.4% |
| 3Y Average Annual Revenue Growth | 1.8% | 5.7% |
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| LTM* Operating Margin | 31.9% | 18.8% |
| 3Y Average Operating Margin | 30.8% | 18.4% |
| LTM* Free Cash Flow Margin | 23.5% | 13.5% |
*LTM: Last Twelve Months
If you want more details, read Buy or Sell AAPL Stock.
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