Analyst: Apple was going down to $130 no matter what results they posted

“As expected, Apple (AAPL) had a very merry Christmas, posting the best quarter in its 32-year history, with earnings up 58% over the same quarter last year. But the good news fell on deaf ears in a market roiled by the broader meltdown,” Philip Elmer-DeWitt blogs for Fortune.

“And the company’s conservative projections for the next three months seems to have spooked investors attuned for signs of a coming recession. Apple’s shares, having closed at 155.64, down 3.5% for the day, plunged more than 12% in after-hours trading. At one point the stock hit 136.75, a four-month low,” Elmer-DeWitt reports.

“If this were any other company, the market’s reaction would have seemed bizarre… But Apple is not any stock. The market has come to expect extraordinary earnings growth, especially in the Christmas quarter. Traders instead seemed obsessed with Apple’s forward-looking guidance,” Elmer-DeWitt reports.

“Piper Jaffray analyst Gene Munster confessed that in his five years of covering Apple he’s never seen anything like the market’s reaction to these earnings. ‘I talked to one of our technical analysts before the call and he told me that the stock was going down to 130 no matter what results Apple posted,’ Munster said in a phone interview. ‘Something bigger is going on in people’s minds. There’s a feeling that stocks need to go back to their 200 day averages as the market corrects itself. This is not a bullish sign for other tech stocks going forward,'” Elmer-DeWitt reports.

Full article here.

85 Comments

  1. The broader issue is that Apple is not shooting itself in the foot causing all this. There are other forces afoot. Apple is strong, getting stronger, and is certainly not sitting still.

  2. The stock market is often an illogical place. Witness the article above. In the turbulence of market sentiment following the downdraft of the sub-prime meltdown, even the Fed lowering short-term interest rates 3/4 of a point, and longer-term mortgage rates dropping as well did little to soothe the nerves of Wall Street today. Apple got caught in the downdraft.

    But in chaos, there is opportunity.

    I am a strong believer in the thoughts of Warren Buffet and Peter Lynch. In a market panic, they see bargains. Instead of worrying about guidance, they look at earnings and earnings history. Lynch always admonished that stocks track their earnings. History bears this out. Please understand that earnings and stock prices don’t move in lock-step – there is often quite a lag. A stock’s price can get way ahead of its true earnings, or vice-versa. It’s this latter category where bargains can be had.

    If Apple’s stock price gets pushed down below what earnings suggest is its true value, that’s a buying opportunity. As Warren Buffet always said, “I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when
    others are fearful.”

    This might be that time. Wait a few days to see how the market settles. But you might find a bargain in the produce section. Look for the shiny Apples…

  3. Hmmm, only a buying oppertunity. ” width=”19″ height=”19″ alt=”grin” style=”border:0;” />

    I think that there are forces at work that dislike Apple or at best, use the like of Apple to drive the market in a direction that is favorable to them.

    Sell High, buy low. Even if you have to create the very forces that make the market move. 🙁 The FCC needs to catch these people, but, hey, they are only the government, right?? LOL

    en

  4. @ en

    “I think that there are forces at work that dislike Apple or at best, use the like of Apple to drive the market in a direction that is favorable to them.

    Sell High, buy low. Even if you have to create the very forces that make the market move. 🙁 The FCC needs to catch these people, but, hey, they are only the government, right?? LOL “

    If you don’t like the rules of the game, don’t play.

  5. “A stock’s price can get way ahead of its true earnings, or vice-versa. “

    That’s what had happened with Apple, it needed 30% growth every year for a decade to support it’s price. an 8% forecast of growth doesn’t match that expectation, hence the price goes down.

    “The FCC needs to catch these people”

    FCC, I think you mean SEC? Anyway, there’s no nefarious moves afoot there, just an overvalued stock beginning it’s fall back to it’s true value.

  6. 1. Apple always drops after an earnings announcement.

    2. The Second Quarter is always much slower than the first quarter (fiscal year) because Christmas is over, there’s no educational buying yet, and it’s just the slowest quarter of the season.

    3. Apple’s drop had nothing to do with its earnings report; it was a knee-jerk reaction to the rest of the market dropping. Just watch, in a week to 10 days, we’ll quietly have two or three 200+ point days which won’t be hyped on CNN.

  7. “This is only the beginning. Wait until a tax and spend socialist is in the white house.”

    Yeah, baby. Bring it on!

    Meanwhile, the Republican candidates continue to offer to bribe the electorate with tax cuts in the hundreds of $$- while shoveling billions into the pockets of their corporate pimps.

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