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Apple (AAPL) Stock Slumps Ahead of WWDC

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Shares of Apple (AAPL - Free Report) slipped more than 1% in early morning trading Monday, just hours before the start of its annual Worldwide Developers Conference—an event that could reveal the first official details about the tech giant’s next line of hardware.

Today’s price action comes after a key analyst downgrade from Pacific Crest. The firm lowered its rating on APPL to “sector weight” from “overweight,” citing concerns about the risk associated with its highly anticipated iPhone 8 launch.

“At current levels, we believe investors are anticipating an extremely strong iPhone 8 cycle, while giving relatively little weight to risks around gross margins, elasticity, supply issues, or the likelihood for declines beyond the iPhone 8 cycle,” Pacific Crest analysts said in a note.

For a stock that has traded on the expectations of a massive iPhone launch in this, the tenth anniversary of its marquee smartphone device, Pacific Crest’s concerns seem somewhat reasonable. The iPhone 8 will certainly be huge, but are there other risks that investors are ignoring? Perhaps.

Nevertheless, anticipation remains high for WWDC, which likely won’t feature the full debut of the iPhone 8—but could tease initial details or spotlight other upcoming hardware devices.

The rumors are, of course, swirling, and one of the most prevailing theories suggests that Apple could be getting ready to enter the home automation game with an Internet of Things product that could rival Amazon’s (AMZN - Free Report) Echo and Alphabet’s (GOOGL - Free Report) Google Home (also read: How to Invest in the "Internet of Things").

WWDC—as the name implies—is a developer conference, which means it is traditionally a software-focused event. In that vein, Apple is expected to premiere the latest version of iOS, but most analysts are expecting hardware to hog the attention this year, with updated Macs and iPads also supposedly in the pipeline.

AAPL has been one of the hottest stocks on Wall Street this year, and we’re really just getting to the most exciting times for the company. Look for this tech behemoth to continue dominating headlines as we learn more about its announcements (also read: Here's Why Apple Stock Has Been Crushing the S&P 500 This Year).

Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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