“Apple Inc’s results will be dissected more closely than ever next week, after a share swoon raised concerns on Wall Street that the stock’s gravity-defying rally may be losing steam,” Poornima Gupta reports for Reuters. “Five straight days of stock losses for the world’s most valuable company sparked fears it had ventured into dreaded bubble territory and was overdue for a strong pullback. Shares reversed course on Tuesday, gaining 5 percent.”
“Between major legal challenges across several continents, increasing competition from Google Inc’s Android — now the world’s most-used mobile software — and confusion over what its next groundbreaking product will look like, more cautious investors are re-evaluating their positions and cashing in some holdings ahead of Apple’s second-quarter earnings next Tuesday,” Gupta reports. “There’s reason for caution: Apple’s shares surged nearly 60 percent to a high of $644 this year. The slightest sign of trouble in the earnings report may prompt further profit-taking. ‘Any disappointment in Apple could lead to a significant selloff in the short term,’ said Channing Smith, co-manager at Capital Advisors Growth Fund. ‘Are we long term believers in Apple? Absolutely, but as we move forward…you get up here to over $600 and you say, ‘Hmm, this is getting pretty frothy, expectations may be getting out of line.””
MacDailyNews Take: The share price is meaningless. What’s the P/E ratio, dipshit?
We doubt Channing Smith could analyze his way out of a wet paper bag.
More tiresome, ginned up “concerns.” It all amounts to exactly what exits the tail end of a bull.
Gupta reports, “The world’s most valuable company is expected to present a positive short-term picture when it reports earnings. Apple is estimated to have sold between 30 million and 35 million iPhones and around 13 million iPads on average last quarter, according to Wall Street analysts. Monstrous sales of the iPhone — 37.04 million — accounted for more than half of Apple’s first quarter revenue and assuaged investors’ worries about the company’s size slowing it down.”
MacDailyNews Take: What is Apple’s share of the smartphone market? What’s Mac’s share of the PC market? How many hundreds of millions are primed to buy their first tablet, a market that Apple created and dominates with iPad?
Apple’s current size is meaningless because their addressable market is virtually limitless.
Hey, iCal just bounced. Check out this 2:04 Reuters’ video (from a mere five days ago) entitled, “Believe it or not, Apple at $620 is cheap.”
Schizo much, Rueters?
Gupta reports, “Over the past week Apple’s stock found itself in relatively unknown territory, declining 9 percent to $580 before bouncing back over 5 percent to nearly $610 on Tuesday. It had touched an all-time high of $644 on April 10. ‘There was some nervousness probably that perhaps everyone that wanted an Apple product already bought one,'” said Jack Ablin, chief investment officer for Harris Private Bank in Chicago.”
Full blatantly transparent manipulation attempt – Think Before You Click™ – here.
MacDailyNews Take: How many abject idiots can a Reuters’ hack collect into a single fomenting exercise? We bet that while she was scribbling, Gupta actually cried real tears that AAPL added 5.1% yesterday which made her piece and many of the “analysts'” quotes within in all the more laughable.
Well, if it’s Reuters, then it must be… Bullshit!
Reuters and DigiTimes, same same.
Large sell-offs are also known as great buying opportunities. Bring them on.
MDN – quite a succinct analysis! Nice job ;^)
Yesterday I read a very compelling reason as to why the stock had tanked over the past week. Lotsa people selling AAPL to pay taxes, due yesterday. Mine is due Oct 15th and I’ll be doing the same.
Oh dear. Is the sky falling on Apple? Are we all doomed to watch their stock tank? BlahBlahBlah?!
NO. None of this baloney actually has anything to do with any tangible reality regarding Apple.
The only reasonable explanation I’ve read so far this week is that many stockholders sold Apple shares in order to pay their 2011 tax bill. The end.
IOW: It’s people buying and selling, on a whim, a rumor, or practical reasons, who make stock prices go bouncy boing. Going all scaredy cat over unresolved lawsuits and DOJ indictments is mere silliness. So there! 😉
Wall Street and so-called “news” media are corrupt as corrupt can be.
Apple should have just kept things the way Jobs had it. The dividends fell right into speculators feet. It brought in volatility.
Profitable companies should always keep cool and not give in to Wall St. pressure. Volatility is their game and they will game you any chance they get. The stock price was fine before, it kept going up steadily and Wall St. speculators mostly stayed away.
Apple raised about 28% in just 3 weeks and it has lost like 8 % in 5 days. Where is the problem? they can still lost 30% and still be a very good stock option.
In a recent university study, Channing Smith was found to analyze his way out of a paper bag nearly 62% of the time.
I think the analyst has a point, to some degree.
Look, Apple is trading at a ttm P/E of about 17. That gives it a forward P/E that’s significantly lower, and makes it very favorable compared to the average stock which has a higher P/E (most do). And, Apple’s growth has been accelerating. Buying the stock today means that long term, whatever silliness happens in the market, there will be significant pressure due to massive earnings to support a much higher price than it is at now. That’s just pure fundamental analysis.
However, this analyst is taking into account investor behavior and saying that many investors simply don’t like uncertainty. The most successful investor, Warren Buffet, specifically has stated why he won’t invest in Apple or any other similar company. Many other investors who may adopt some of Buffet’s strategies have invested in Apple due to the tremendous upward pressure on the stock, and it’s paid off quite well for them.
Now, some of these investors may have been scared of the unknown in regards to Apple’s stock. They’re profit taking, which is usual after a big run up of any stock, and they’re thinking they’d rather lose an opportunity based on stellar earnings on the 24th, than lose value, albeit temporarily, based on earnings still being great but having some narrative of negativeness that investors latch on to.
TL;DR: Apple’s stock took a hit due to post run-up profit taking. Apple’s stock is turbulent right now due to nervousness regarding Apple as a stock that people have been trained to expect it to blow away expectations, regardless of the extremely positive fundamentals of the stock.
Apple share is second to Android phones. There really is no third. Who else is still around?
I’m sure if we look back someone can find a Reuters article calling Apple stock frothy back at $100, $200, $300, $400, $500, and $600.