Apple stock continues swoon

“Apple is trading at [$536 per share],” Darcy Travlos writes for Forbes.

“As recently as April 9, it touched $640. A year ago, it was $332. So the stock appreciated 93% from a year ago to its high, and has retreated 15%. The retreat is making investors nervous because a $94 price drop sounds much worse than a 15% decline on the heels of a 93% run-up,” Travlos writes. “Why is Apple’s stock gyrating so much?”

Travlos writes, “Psychology. Trading. Institutional Ownership. Any or all of these may move around a stock irrationally and create a buying opportunity for long-term investors (ie, be the one who bought at $332 and still has a 67% return to date). Other potential explanations include chatter about subsidy reduction on the iPhone and some data out of Asia that suppliers to the iPhone have cut their orders.”

“Apple, today, trades (less cash) at, seriously, 8x next year’s earnings. People are clamoring over Facebook, which is going public around 50x next year’s earnings. Apple sells products that people want and will pay a premium for over other “similar” products in the market because of the ease of use, the entire Apple ecosystem to which they are attached and the tangible benefits association with them. Facebook sells ads. The ad market can be fickle and unpredictable,” Travlos writes. “Look at Apple’s previous 10% dips, even in the past year, in May, July, September and October. In each case, the stock rebounded within 6 weeks. Long-term investors who build a position now in Apple stock will be very happy by the holiday season.”

Read on in the full article here.

MacDailyNews Take: Manna from heaven.


  1. There sure seem to be a lot of people enjoying Apple’s fall, but I’m sure it’s not pleasant for those who bought in over $600. I’m still well ahead, but the only thing that bothers me is how easily Apple’s share price can be manipulated down $100 without there being any seriously negative news or sales drop. When this happens it only shows that guys like Dediu are wasting their time with finely-tuned graphs and charts because they have no connection to the real world of sales, earnings, share price or anything else. Apple doesn’t seem to have any real value at all since there are no set rules or any rule can be broken. I’m not saying Apple stock won’t go back up. I’m only saying that Apple’s share price movement is irrational from my point of view since Apple seems to be taking more of a beating than most for no reason I can see.

    1. Any stock can be beaten down due to issues unrelated to the company’s fundamentals. If you don’t know this and don’t understand how to protect yourself and/or take advantage of such scenarios you should really stay out of the trading/investing game for your own sake.

    2. Many people and large trading groups cashed in AAPL stock and bought FaceBook’s IPO. (Maybe a little EURO and Greece too.) We will see after FaceBook’s stock is sold off Friday after the IPO. If they were in AAPL before, most will buy back in at these ultra cheep stock prices.

      I wish Apple’s board would step up and start buying back their shares now. Why hold off and buy them back $50 or $100 higher?

  2. Be sure to thank that a$$hole Scott Forstall for selling 90 % of his stock….think he might have a little inside info of what’s to come….I mean why would he sell with people predicting it will go to $1000…it’s dropped $100 since he sold.

    1. Well, he could have sold it at $644, instead he sold it at $600 but your point still stands. Also, technically it is only 90% of stock that was awarded to him prior 2010. He was given stock grants in 2011 too. Overall i think the stock Scott sold represents 25% of his overall Apple portfolio. Makes sense to diversify I guess.

      BTW – Steve Jobs had less than 5% of his wealth invested in Apple. Most of it was in Disney/Pixar – just saying….

  3. Guys!! It is clear that big investors want (us) to sell now !!! Surrender or scared !!! Apple bridge is falling down , falling down …. I am so scared !!!!! So scared !!!!!!!!! I am going to surrender !!!

  4. Still too expensive to accumulate IMHO and I have been in Apple (stock) since 2001 and products since Carter was in the White House and the Mac wasn’t even being developed.

    Apple’s a good company but the stock moved up too fast and some are going to take money off of the table.

    Not trolling, but it’s going to go down more and I’ll be buying at $400.

    1. @ $400/share Apple would have an impossibly low valuation, especially if you adjust for $120 cash/share position. I am talking about forward looking P/E ratio of 4. I can’t think of any business in any industry that would have such low valuation. To put things in a context, S&P 500 companies on average have P/E ratio of 17. @ $400/share Apple would be valued 4+ times less than the average company in S&P 500 list. There is also a debt issue. An average S&P 500 company has about 30% debt. Apple has zero debt. When adjusted for debt, Apple P/E multiple drops even more – to 3 if we use your $400/share prediction. Wow.

  5. Oh he’ll yes! Now that is a bargain! I’ll be buying up lots as we wait for the WWDC. If no phone appears I will double down and sell off some in the fall so I can buy more after Q4.

  6. There is no reasonable mean that ANY share might remain a “good value”, these next years. No way. The money is nothing but a matter of belief and trust… it’s only wind. With trillions of too many printed banknotes, who could keep on trading on such wacky basis?

  7. This is simple. EVERYBODY, including the hold out deniers, knows that the post-Jobs era is predictably resulting into Apple becoming an ordinary company with ordinary products. That’s what’s causing the jitters in AAPL and it’s going to continue. We’ll see some upticks, rallies, etc., but never again will investors be moved by the idea that something magical is just around the corner. It’s not.

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