U.S. tax hikes alone cannot explain Apple’s big selloff

“The big bullish argument on Apple in the fourth quarter of 2012 was that the near $200 drop from its high in the stock price was primarily due to tax-motivated selling,” Nigam Arora writes for Forbes. “The bulls contended that fundamentals were intact. Now this big bullish argument has proven false as trading in 2013 has unfolded.”

“Much of the Wall Street is like a herd of sheep; once something catches on everyone jumps on the band wagon,” Arora writes. “Much of the Wall Street is like a herd of sheep; once something catches on everyone jumps on the band wagon.”

Arora writes, “Barron’s did find out that there was limited evidence to support the tax selling theory. If the tax selling theory was correct, Apple stock should now be trading over $600.”

Read more in the full article here.

MacDailyNews Take: By their own rules, mutual funds had to divest themselves of AAPL shares after the stock’s big run up over $700 in mid-late September. Naturally, the mutual fund managers began to sell in order to rebalance their portfolios and, then, as Arora writes, “Much of the Wall Street is like a herd of sheep; once something catches on everyone jumps on the band wagon.” The “fiscal cliff,” fears of tax hikes, and the usual assorted anti-Apple FUD and SEC-ignored fomenting created the perfect storm for those looking to pick up AAPL at a discount as well as for the AAPL shorts.

One thing’s certain: All eyes will be on Apple as they report earnings for the holiday 2012 quarter (Apple’s fiscal Q113) on January 23rd after market close. As always, we’ll bring you the results the moment they are released, right around 4:30pm ET on January 23rd.

Note: On October 25, 2012, Apple CFO Peter Oppenheimer gave Q113 revenue guidance of “about $52 billion and diluted earnings per share of about $11.75.” Currently the analysts’ consensus is calling for revenue of $54.54 billion and EPS of $13.33. The later numbers are the ones Apple must beat.

Related article:
Apple to webcast Q113 earnings release conference call on January 23rd – January 2, 2013


  1. “Note: On October 25, 2012, Apple CFO Peter Oppenheimer gave Q113 revenue guidance of “about $52 billion and diluted earnings per share of about $11.75.” Currently the analysts’ consensus is calling for revenue of $54.54 billion and EPS of $13.33. The later numbers are the ones Apple must beat.”

    And those numbers will be unreasonably jacked up 24-48 hours before the earnings report, just to make sure Apple can’t meet them.

    1. I am a long term investor in Apple. I have seen long stretches of unexplainable pauses in growth of AAPL. In the end, the sum of the parts of the market that Apple’s RoadKill had will belong to Apple. There is nothing blocking Apple’s dominating every market they enter well until AI (Artificial Intelligence) is offered by some other company. We are 3 to 10 years from that happening. Any strides that would have come from NASA or the military is being defunded by the Federal Government and that leave companies like Apple to make AI happen first.

      So, this is a long term investment and to hard to play day by day or story by story.

      1. If Apple gives all their 135 billion cash back like Wall Street wants there will be no AI from Apple or for that matter Microsoft they are the only two companies with the cash and size to do anything serious in AI.

  2. The sell off is because stupid investors trust on unconfirmed news about Apple iPhone poor sales but ignore the official Apple true data saying iPhone 5 break record sales.

  3. “Note: On October 25, 2012, Apple CFO Peter Oppenheimer gave Q113 revenue guidance of “about $52 billion and diluted earnings per share of about $11.75.” Currently the analysts’ consensus is calling for revenue of $54.54 billion and EPS of $13.33. The later numbers are the ones Apple must beat.”

    In Apple’s financial results for its fiscal 2012 first quarter which spanned 14 weeks and ended December 31, 2011, the company posted record quarterly revenue of $46.33 billion and record quarterly net profit of $13.06 billion, or $13.87 per diluted share. These results compare to revenue of $26.74 billion and net quarterly profit of $6 billion, or $6.43 per diluted share, in the year-ago quarter. Gross margin was 44.7 percent compared to 38.5 percent in the year-ago quarter. International sales accounted for 58 percent of the quarter’s revenue.

  4. OH, NOES! AAPL has gone down in price! Quick, MDN, spin it! ‘Cuz otherwise Apple will look doomed or something! Am I the only one puzzled by the absolute obsession this website seems to have with Apple’s stock?

    It’s depressing. I come here to read news about Apple gear, and it seem half the stories are about lawsuits and the stock price.

    I couldn’t care less about the price of AAPL, as long Apple continues to make cool gadgets for me to buy and make money.

    I know, I know: no one’s making me read the articles, and generally I don’t. I just pine for the days when MDN was filled with juicy speculation about the next i-Gadget, and not all this boring legal and financial stuff.


    1. Of course you could just skip reading the things you do not care about. For instance I have no interest in hocckey so when I see a story in the sports section about hockey I do not read it. And I do not ask them to stop printing hockey stories, some folks seem to like hockey. Try it, you might like it.

      1. And if your favorite sports site became 50% hockey stories, when it wasn’t before, you wouldn’t be at least a little bummed about that?

        I mean, I’m reaching the point where there’s going to be little reason for me to keep reading MDN. Which depresses me, because it’s been one of my favorite site for nearly a decade.


        1. The reason they keep writing about the stock is because Apples stock is the bastard stepchild of the stock exchange and there is no good reason for it. Except a bunch of manipulation by analysts and major fund groups pushing stock up and down. They have more profit, cash on hand, no debt and huge sales of some of the hottest products on the planet and yet they get treated like there rim. going bankrupt tommorrow.

  5. The current economic philosophy driving our government is that huge and increasing spending levels combined with increasing tax rates, plus vast increases in federal regulation are the way to an “ideal” economy. So, now government gluttony and government theft are the policies in place. Smart money is betting this will not grow the economy. Apple requires a growing economy given its large size to sustain the large growth it needs to maintain the stock growth. However, you can’t eat an Apple. So, until the current economic plan is replaced with one not based on government gluttony and theft Apple will continue to be facing strong headwinds as it tries to grow. Some simple basic economic sanity would help, but it is nowhere to be seen among the geniuses who are leading us.

    1. No, it’s not. Please give specific examples at the “large government” you talk about. The truth is, federal government employment levels have declined for 11 years.

      1. How about a government that has spent $1.3 trillion more per year than it takes in? How about an administration that says that is not enough spending and more “public sector spending” is the way to “stimulate” the economy. Windmills subisides, algae subsidies, electric car subisides – all to big political donors who lead companies that go bankrupt after spending the “stimulus” money. How about a government that has doubled the number of people n Food Stamps while bragging its policies have created a “recovery”. How about a government that has not even bothered to create a budget since Obama was elected, under the normal Congressional process. No budget. How about a government where annual increases of roughly 8-10% in real dollars spent is call “no growth in spending”. How about a government that runs mandatory “retirement” systems for the citizens (but not for the government employees) that are underfunded in excess of $63 trillion, according to the SS and Medicare trustees? How about a government where bills are routinely passed without any time to read them? The “Fiscal Cliff” bill of 300 pages was distributed to Senators and Cngressmen 3 minutes before the vote. This allows things like multi-billion tax savings provisions for Goldman Sachs, GE, Warren Bufffet, and Hollywood. And you thought those “rich people” were going to have to pay more. No, the biggest %tax increase is on those making about $30,000 per year, with FICA now adding about $2,000 per year in taxes to those poor people. Yes – the government automatically gets about a 20% increase in revenue every year and nobody – hardly – challenges any spending bill. The money is just printed and the currency and the capital base of the country is thus destroyed.

        1. > How about an administration

          So you’re being anti-Obama. How about Bush, who started a completely irrelevant war and DID NOT CATCH/KILL Osama Bin Laden?

          (BTW, I am probably far more conservative than you are on many issues..)

          I also think that we should get rid of ALL subsidies, but having them for electric cars & algae fuels is FAR less bad than having them for oil companies and corn companies.

          1. Oil companies do not receive federal subsidies. They are among the largest taxpayers in corporate America. They are allowed to deduct exploration expenses, as other companies deduct their business expenses. The wind and electric companies make zero profits but are handed money with no strings attached, which they promptly lose. Many have closed down since they got their money. Ethanol is worse on the environment than gasoline and requires a $.50 per gallon federal subsidy to even come close to competing, along with federal mandates that it be used. And the use of it for fuel drives up food prices. Don’t get me started on how moronic the Cash for Clunkers destruction of over 1 million perfectly good cars was, with no recycling of any other their parts.

            Yes I am anti-Obama. He is hostile to the Constitution and is destroying the economy. Bush’s “wars” were all approved by Congress. Did Congress approve the removal of Mubarek and Quadaffi? No. Now we have Islamic dictatorships there which believe in stoning women and gays. And Bush did not give automatic weapons to drug cartels as a conscious policy, which were used to kill several hundred Mexicans and also US border agents.

  6. Baaa. Baaaa. They took all my green wool away from me and now I’m naked as they day I was born. Time to move to another pasture.

    It’s rather amusing that they can give dozens of reasons why Apple should be trading a lot higher. It’s too bad investors don’t read those articles. They only read the articles about Android and Samsung trampling the iPhone into dust.

  7. Kent,

    Well said. I appreciate your thoughtful comments. I don’t care what political party one’s affiliated with — the 1.2 TRILLION in extra spending per year over the last four years and lack of an annual budget is irresponsible. And to all those who reference the national debt increase under President Bush — it went from $6 to $10 trillion in eight years; under President Obama, it ballooned from $10 to over $16 trillion in FOUR years! And there’s no reversal or even stabilization in sight! I don’t understand why some people think it’s OK to spend, spend, and spend OUR money (for those of us who pay taxes). Of course, if one doesn’t pay taxes, then of course they’ll think it’s OK to keep receiving government handouts. And I’m not referring to the truly needy in our country dependent on the social safety net.

  8. Skip the article! His whole argument is”My 30 years of experience in the markets have shown that when everyone agrees about a certain proposition, the proposition is not likely to work out. The market is perverse; it tends to prove wrong the largest number of people possible.”

    I don’t know why MDN picked this up.

    Obviously Cap |Gains selling is not ALL of the reason. Let’s see how things play out in the next few weeks.

    The Asymco article is much more valuable to investors.

    Or here:

    1. I can tell you how it will play out lol, apple will post huge sales and wall street will reward it by the stock taking a big hit in price like it always does when apple announces big earnings because of some ridiculous reasoning.

      Or apple wont meet analysts ridiculous expectations and apples stock will take a bit hit in price.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.