“Apple Inc. shares continued their descent, extending a decline from an April 10 intraday peak to more than 10%,” Jonathan Cheng and Jessica E. Vascellaro report for The Wall Street Journal. “That, by some definitions, puts Apple’s shares into a ‘correction.'”
“The decline has been swift, taking just nine trading days. Before then, Apple had been up 59% this year, reaching an intraday peak of $644 a share on April 10,” Cheng and Vascellaro report. “The stock has lost $56.5 billion in market value over the past two weeks.”
MacDailyNews Take: So, in other words, Apple stock is up 41% this year.
Cheng and Vascellaro report, “On Friday, shares of the Cupertino, Calif., technology company fell for a third straight day, dropping $14.46, or 2.5%, to $572.98. The stock is down 9.9% since its all-time closing high hit on April 9. It tumbled 5.3% this week, its worst since October, shortly after co-founder Steve Jobs died… The company still is expected to report a strong second quarter. Analysts predict earnings of $9.92 a share on revenue of $36.6 billion, according to estimates from Thomson Reuters. That is up from $6.40 a share and $24.7 billion in sales in the year-earlier quarter.”
Read more in the full article here.
MacDailyNews Note: Tahnsk to MacDailyNews reader “peter gunther” for making us do the math above.
Related articles:
Analyst reiterates: Price competition makes Apple stock a ‘sell’ with $270 price target – April 20, 2012
Apple slips into correction mode; falls 10% off high – April 20, 2012
Apple to webcast Q212 earnings release conference call on April 24 – April 20, 2012
Bear raid. I’ve owned a lot of AAPL since the single digits, and seen this over and over. Hedge funds and high-frequency-trade oriented investors do this after a big run up in the SP. Short selling increases. Nano second programs target sales a low volume moments, and negative articles and blogs proliferate. After some goodly profits the shorts cover and go long, because it always goes back up. Not much has changed, this company is still growing and kicking major ass, while the competition still has no idea what to do. It will be at least another year before Apple runs out of Jobs’ roadmap. As long as they keeps gaining relevance while others fumble, I am a very comfortable long. Next week earnings will beat, again. Shorts will desperately try to find something negative, again. Longs will get richer.
I agree that Apple has great long term growth prospects, but I doubt that shorts will have to desperately find something negative. Historically, Apple drops off after a earnings report because it’s never good enough, 2011 Q4 being an exception. The previous quarter Q3 they surpassed their own goals, and yet didn’t meet the “expectations” of the street and so-called analysts. They had 54% growth YOY and their stock went from 422 I believe to 398 or so in after hours.
While I’m long on aapl too, I am very pessimistic when it comes to the Street being able to internalize aapl’s strengths in the short term. Thus, I have no intention of selling my aapl, but I bet they’re going to take a short term hit after their earnings report. Which is fine since I intend to buy some more if it does.
Also, in a related development, msft had their revenue slip 2.4% YOY and yet their price rose in after-hours. If there was a way to short msft in the long term without having to pay interest on it, I would do it.
@ m159 and long on aapl,
Well said. 🙂
I wish I could care about the ups and downs of Apple stock, but AFAIAK, nothing more needed to be said once Apple reached 300 dollars.
None of the stock manipulation and the whims of the market had any effect or benefit regarding Apple’s rise to the top. It won’t make any difference now. The only thing that will change Apple’s fortunes is if it’s competitors get their act together and come out with products that leapfrog Apple’s.
As if!
Just look at AAPL’s chart over the last 3-4years. On average it has risen some 60%/yr. All things having been equal, this trend should have resulted in an exponential curve. Instead we see a straight line, notwithstanding a non-ending series of quarterly results that exceeded everything in the past. Something has been very wrong. Every few months FUD and speculation artists have done everything in their power to hold AAPL down. Every time it snapped back, but not entirely.
My point here is that the recent run to 644USD/share is nothing but a correction for all the negative speculation in the past 2 or 3 years.
When this happens, there will always be some overshoot, but if one looks at what the true exponential curve should have been, one ends up with something in the neighborhood of 600USD/share.
BTW, AAPL still needs to rebounce fully after the drops at the ends of 2007 and 2008, where they did business as usual, but their stock dropped for no reason at all, except that they FOLLOWED the NASDAQ. Today, the NASDAQ follows AAPL and the FUD and speculation artists are attacking not just AAPL, but the entire US economy.
Oh please. Cmon, this goes on all the time and not just with AAPL. The evil people aren’t “out to get AAPL”! It’s just the stock market doing what the stock market does best, weed out the amateurs. Those aren’t fanboys trying to manipulate AAPL, those are people trying to get an advantage. It’s nothing personal against fanboys. And it’s sure as hell not an attack against the “entire US economy”. Geez, it’s not some fucking conspiracy against AAPL it’s the stock
market!
“Products that leapfrog Apple’s”? Ah, the fallacy that even the competitors who should know better are chasing. Easy (well not really) to specify an iPad or a smart phone with better specs, impossible to come up with a whole ecosystem. Why does Google keep publishing numbers of apps on their app store? To give the impression their ecosystem is the equal of Apple – which everyone knows is a complete fantasy, unless you want to count crappy pornware and adware…
I could not live my life focused on the stock market, the racetrack, or the lottery. Apple is my favorite tech company- I buy their products whether I can afford them or not. There’s enough BS in the world, especially politically- and there’s not enough time for me to play games. Any games. Other than art and music. I can’t worry about stocks- I’ll let my “advisors” do so…
On the plus side, I was getting sick of people bragging about their Apple stock around here, anyway.
I’d sure like to know what this correction is based upon. I could see if Apple’s P/E had run up greatly, but it hasn’t, so why should Apple be any more ripe for a correction than another other company pulling in plenty of revenue. I’m not saying this so-called correction is anything serious, but I doubt if it can be filed under the term “correction”, but more under the term “manipulation”. Somehow, I had hoped that the dividend would stop shareholders from selling off, but I was certainly wrong. There doesn’t seem to be any one thing that can prevent Apple’s share price from doing such wide swings over nothing substantially negative.
What is amusing is that with all the talk of a post-PC world, Microsoft seems to be thriving very well and its share price is as high as ever recently. I guess Windows 7 and Microsoft Office are selling briskly and everyone is excited about moving to Windows 8 by the end of the year. There had been talk that Windows PC sales were down but it doesn’t seem to have any effect on Microsoft at all. Apple hasn’t even put a scratch in Microsoft’s money-making machine.
“Microsoft seems to be thriving very well and its share price is as high as ever recently”
LOL. “ever” is the correct term, indeed.
Look at MSFT’s NASDAQ chart over the last 10 years. It has always been between 25 and 30 USD/share (except from a drop to 15 early 2009, from which it recovered unexpectedly well).
In contrast, over the last 10 yrs AAPL has risen by a factor of 75.
Considering so many of my friends have replaced their PCs with MacBooks this year I can’t agree with you. I’ve never seen so many converts in all my years of using Apple products. The conversions must be eating up some of their potential growth and future profits of Microsoft.
I that Laughing Boy guy was just joking and being sacarstic.
When that Cramer guy recommends a buy it’s time to sell
Always do the opposite of what he says he’s the kiss of death
It’s not a correction. It’s profit taking and the usual manipulation.
The first real sales number from Verizon shows apple is set to meet or beat the numbers.
The stock has had such a huge run up this had to happen sometime. I’m surprised it took this long.
Two reasons for this:
(1) The end of this week was options expiration. AAPL has heavy options volume, and is consequently volatile running into options expiration.
(2) On top of that, Apple announces earnings on Tuesday. AAPL speculators love earnings announcements. They play straddles and more esoteric trading strategies, the net result of which is irrational wobbliness before options expiration.
There’s nothing to see here except a massive buying opportunity yesterday. (I bought; hope you did too!)
Be aware that some traders will set up their new positions on Monday and there may be even more short-term wackiness this week, thanks in part to the weekly options. But unless you need liquidity in the next week or so, ignore it.
My $0.02.
Manipulation plain and simple,honestly these investors are quite stupid .just my .02
If Apple’s Stock Price and Market Capitalization was legitimate and based on fact instead of speculation its stock price would not wildly fluctuate on a daily bases. Establishing Apple’s market capitalization on its historical sales growth which is clearly unsustainable is a deceptive method which many analysts have utilized to promote apple stock as being greatly undervalued though it has increase by more than 250% in the last 2 years.
These are the facts:
Apples 2011 net income is reported to be 26 billion on revenues of 128 billion. This is a 185% increase from Apple’s 2010 net income which was 14 billion. This growth rate will never occur again due to the considerable income apple has achieved.
Many analysts believe Apple will expand it sales by 20% for the next 5 years due to its smaller market share of a sales compare to its competitors. This is a great deception. To accomplish this apple sales will have to increase to 153 billion in 2012 and by 2016 and have annual sales of 318 billion. This will never happen due to the enormous scale of 318 billion.
By comparison NASA Space Shuttle operating budget in it last year was 3 billion. I provide this as an illustration, to give the cheerleaders a clued about the staggering amount of income Apple currently produces.
Apple’s average net income over the last 5 years is
11.3 billion. This income average would typically be utilized to estimate a value for and asset or company. How is it possible for a company with an average net income of 11.3 billion to achieve a market capitalization of 590 billion without some form of manipulation by the institutional investors?
I realize there is a difference between market capitalization and the use of a capitalization rate to determine value. However, market capitalization is a qualitative value not easily determine as it represents the public consensus on the value of a company’s equity and in Apple’s case it has been inflated.
The use of a capitalization is a quantitative method to determine value from quantifiable data such as income and expenses.
Let’s assume an unlikely scenario that Apple’s net income is 40 billion in 2012. To achieve this Apple will have to increase its sales by 157% or by 69 billion, this will never happen. But for this analysis I will utilize a net income 40 billion to determine a value for Apple as a company.
If a typical capitalization rate of 10% is applied to this net income, a value for the company can be estimated:
ion / 10% = 400 billion.
I acknowledge the capitalization rates are assumption, but historically a 10% rate is typically used by investors. By this analysis Apple’s market capitalization appears to be in excess by at least 265 billion.
Now let get to the 1000 dollar but now has been revised down to $750 share price by these expletive saying Apple’s stock will achieve in a relatively short time.
I would have like to use the actual word which best describes these analysts, but I probably would be censored.
The analysts are the likely the same expletive, which made though wonderful forecasts about similar bubble stocks during dot com bust.
This will mean that Apple as a company is approaching a Trillion dollars in value with a the capital recovery of more than 25 years on the money invested as Apple’s net income will stagnate at 40 billion, due to the enormity of that sum and the commoditizing of its products which will have to have lower selling prices to capture more market share of sales.
Every additional billion of net income will be more difficult to earn, due to its enormous size which is 1000 million. This amount of money buys quite a few Ipads, downloads and other apple products. How many more apple products can the market absorb?
If Apple wishes to capture more market share of sales it will require developing additional products with lower prices as the more affluent markets have been saturated, leaving the less capable markets the task of buying all though millions products which are forecasted to be manufactured and sold by apple in the coming years. Eventually their products will become common place and less desirable. You won’t be that stylist with your new iphone or ipad, you will be just another part of the herd.
Just as computers, big screen TVs and many other electronic devices have been commoditized, so will apple products if they wish to generate more sales. This directly relates to Apple’s value as a company and its allege income growth potential. Lower sale prices for Apple’s products will directly impact its net income and value as a company.
If apple stock price continues to soar to new heights, do not jump for joy as it has nothing do with its intrinsic value as a company but is just another example of Wall Street manipulation by a handful of Hedge Fund Managers which allows them to collect their billions for managing the working class retirement funds. Seventy percent of Apple’s stock is owned by institutional investors which have colluded to inflate apple stock price, due to its incredible growth rate over the last 5 years and the difficulty in evaluating its most important characteristic which is the marketing of its products.
Eventually, one of the big investors is going to folded there hand and Apple stock will drop like a stone. Remember this comment because a decline in Apple Stock is in the near future.
The stock market is not an orderly place where free markets price capital for business- it’s a casino and the thing is rigged in favor of a few.
Little fish can play in the game and make money, but most never will. That is the plain and simple truth.
Apple is overpriced despite being a well run company.