“Many a market rally has been built on the strength of one word: China. But as Apple [AAPL] strikes a deal with that country’s — and the world’s — largest wireless carrier by subscribers, investors should be wary of overplaying it,” Dan Gallagher reports for The Wall Street Journal.
“Apple shares rose more than 1% Thursday after The Wall Street Journal reported that it had finally signed a deal with China Mobile, which may enable the iPhone to launch on its network around Dec. 18,” Gallagher reports. “That puts the stock up nearly 10%, or about $46 billion in market value, over the past two weeks as rumors of the impending launch swirled. At $572, the stock is now in positive territory for the year, though not back to the more than $700 seen before the launch of the iPhone 5 in September 2012.”
“China Mobile had 759 million wireless subscribers at the end of October. Verizon Wireless had just 88 million in the first quarter of 2011, when it first started selling the iPhone, and it sold about 4.5 million of them in the first two quarters after launch,” Gallagher reports. “China Mobile’s impact doesn’t seem to be factored into most analysts’ current forecasts. The consensus estimate has Apple’s revenue rising just 5% in the December quarter—which also includes the launch of new iPads and the first full quarter of the iPhone 5S—and 4% for the March quarter, which would include the bulk of the China Mobile launch. Rising estimates could provide some additional lift for the stock in coming weeks, along with Carl Icahn’s newly stated plan to push for a bigger buyback.”
Read more in the full article here.
[Thanks to MacDailyNews Reader “Judge Bork” for the heads up.]
Icahn’s precatory proposal continues to slide into irrelevance.
This isn’t factored in and will remain suppressed until sales numbers prove the talking heads wrong. If Ford opened a market 3 time that of the USA market, Ford’s stock would jump.
This is the same crap that they blamed Steve Jobs for and then Tim Cook. Apple will continue to crush the markets. In just the USA the iPhone, iPads, Mac, AppleTV and even Apple’s routers took No. 1 sales positions and yet the talking heads will still tell you Samsung is winning. Really!
Of course the initial deal news is factored in. What do you think got us from $520 to $570? What is not yet factored in is the actual sales. The potential is at least 70 million iPhones in the first quarter. But then these are the same people who predict a sales increase of 5% for Apple this quarter when the numbers are already reflecting 9%. Most investment “professionals” are as clueless as this author.
How the hell can they bake in the China Mobile deal when it hasn’t been officially announced. That would seem downright misleading if not completely dishonest to investors. This pricing of a stock to include a deal that hasn’t been done is just plain stupid if you can’t judge demand of a product or the prices haven’t been set. The assumption of many analysts that Apple can’t sell many iPhones on China Mobile’s network is so biased against Apple it isn’t funny. They’re basically saying that the iPhone will get less than 20 million China Mobile subscribers. If that’s the case, Apple is just giving away about 97% of China Mobile market share to Android and Windows Phone. That’s totally disrespecting the iPhone’s reputation. I believe even in India, the iPhone has about 5% market share.
I can guarantee you if Amazon had just announced a deal with China Mobile the stock would be up $100. For Apple, it might move the stock $10. Apple shareholders are getting dissed every which way. Still, Apple can take a lot of blame by not using its reserve cash to expand the business into other areas like Amazon does. If Apple used more of its reserve cash like other companies do, they wouldn’t be constantly bothered by people like Icahn. The fact that no one at Apple will say to shareholders, “We have intentions to do this and that with the reserve cash” leaves everyone in the dark.
Right! And if youre saying that CM is baked into the 50 dollar raise youre practically saying that AAPL was overvalued at 700!! The market may have regained – temporarily – some sense and that may be the reason behind the resurrection
If you don’t think rumors, speculation, or gut feelings affect how investors buy stocks, you clearly don’t know how the stock market works. Apple negotiating a deal with China Mobile has been speculated and written about for at least a year now. If news broke that Apple could not reach a deal with China Mobile, Apple stocks probably would have fallen.
Fact is, investors should assume the market as a whole is at least as smart as you are. You should assume everything you know is already factored into a stock’s current price along with some information you don’t know.
If the china mobile deal is bullshirt , how much can aapl drop ?
AAPL was already rising strongly before this deal was ‘announced’. Apple has been seen to sell huge quantities of iPads and iPhones in the run up to the holiday season and the stock price is reflecting that.
It can’t be denied that AAPL surged after the China news, but AAPL also surged on several other occasions in the last week or two without such news reports. To claim that this latest surge is entirely attributable to a Chinese deal is such a foolish concept that only an analyst could have come up with it.