“As Apple announces its 2012 second fiscal quarter earnings on Tuesday, some analysts think the stock price could hit $1,000 and the company reach $1 trillion in market capitalization. I have no idea where Apple’s price is going or what’s in its secretive product pipeline, but I suspect that even with strong recent earnings, it will eventually fall from the tree it’s on now,” John Wasik writes for Reuters. “What troubles me most are stunning similarities to other Wall Street darlings of the past and the ignorance of risk that owning a single stock carries. All former stars have tumbled once they fell out of investor favor – often when their profits were still robust.”
Here are five cautions worth considering:
1. THE MIGHTY FALL: Far too many investors buy in at extravagant valuations and typically hang on when prices fall and the companies are no longer in the spotlight.
2. INVINCIBLE LEADERS LEAVE: How will Apple fare in the less charismatic, post-Jobs era?
3. TORTOISES SURVIVE: Remember the “must-have” phone titans of the past such as Nokia, Research in Motion and Motorola? The more visible the technology, the more volatile it is.
4. BEWARE THE POISON FRUIT: Whether it’s an earnings disappointment, botched product or failure to outpace the competition, Apple will not be immune to worms in the future.
5. THE EXPECTATION CLIFF IS STEEP: Because of its gargantuan market cap – roughly larger than the entire gross domestic product of prosperous Switzerland (2011) – Apple has gained a demanding global audience. Does that mean its stock is less risky because so many people own it? The opposite is true.
Read more in the full article here.
MacDailyNews Take: When it comes to Apple, Reuters is the new CNET.
As we wrote back in February: “The only number that matters is Apple’s headroom (TAM) and there is plenty of that. How many people are still suffering with Windows PCs and do not own Macs? How many people do not own iPads? Or iPhones? Or Apple TVs? Or possible Apple televisions? Or, yes, even iPods? Billions. In fact, there must be over a billion people that have the means to buy an Apple product that do not have one yet. Until Apple saturates all of its markets and/or stops opening new markets, the only limit is the sky.”
[Thanks to MacDailyNews readers too numerous to mention individually for the heads up.]
All eyes on Apple as Cupertino powerhouse reports Q212 earnings tomorrow – April 23, 2012
Reuters claims ‘Apple investors brace for more turbulence’ – April 18, 2012
JP Morgan: Apple Inc. is a sector unto itself – February 24, 2012
Apple and the myth of ‘The Law of Large Numbers’ – April 19, 2012