Why Apple is giving investors a heart attack

“There is a growing discord between Apple, the company that makes iPhones and Macs, and Apple, the stock,” David Goldman reports for CNNMoney. “Apple, the company, is doing great. Apple, the stock, is not.”

“When Apple provides its quarterly financial update on Tuesday, Wall Street analysts predict Tim Cook will say that his company sold a record 76 million iPhones and 6 million Macs during the last quarter of 2015,” Goldman reports. “That’s why Apple is expected to have earned an astounding $18.2 billion in profit in the past quarter. That would be a record, not just for Apple, but for any U.S. company — ever.”

“Yet the stock is down 29% from its peak, which Apple (AAPL, Tech30) reached 11 months ago. It’s down 9% this month alone. What gives?” Goldman reports. “Analysts’ median sales expectations have fallen this year by half a billion dollars and profit forecasts fell by $100 million. Apple’s stock has been downgraded 15 times by different analysts in 2016 alone. Yet investors’ iCrystal balls are notoriously foggy. Apple has a habit of surprising analysts: The company has beaten Wall Street’s profit expectations for 12 straight quarters.”

Read more in the full article here.

MacDailyNews Take: As some guy named Warren Buffett once said:

Be fearful when others are greedy and greedy when others are fearful.

SEE ALSO:
Morningstar: Apple sell-off looks overdone – January 8, 2016
Real world iPhone 6s adoption data contradicts Apple analysts’ so-called ‘supplier channel checks’ – January 7, 2016
Top-rated analyst: Apple’s iPhone business is healthy – January 7, 2016
Apple falls for third day as so-called ‘iPhone woes’ trim $40 billion in value – January 7, 2016
Apple stock price tumbles 3% in premarket, now trades well below $100 – January 7, 2016
Apple stock slumps near $100 amid ‘iPhone sales worries’ – January 6, 2016
Wall Street’s freak out over declining iPhone sales is overblown – January 6, 2016
Piper Jaffray: Apple’s iPhone production cut do not necessarily presage sales decline – January 6, 2016
Foxconn plans ‘rare’ holiday as iPhone output fears rattle investors – January 6, 2016
Apple to release Q116 earnings, webcast live conference call on January 26th – January 5, 2016

26 Comments

    1. Yeah, but remember when these same analysts were crowing about how Apple needed to get into China markets to gain growth? Now all of a sudden they’re too dependent on China for growth. When you only see the negative on both sides of the coin, you lose a little credibility.

      1. I remember this very well. Apple supposedly was going to do terribly in China because the iPhones were too expensive for the average Chinese consumer. Tim Cook said they would do well and he was completely ignored. Pessimism for Apple’s success in China. Devalue Apple.

        A couple of years later. China’s economy is weakening and Apple is too dependent upon China. Tim Cook says Apple is doing well in China. More pessimism for Apple’s continued success in China. Devalue Apple.

        Apple is never seen as winning. It’s as though Wall Street sees no other companies are being affected by a weakening global economy. Only Apple is focused upon as failing because there’s a possibility of slowing growth over the period of a few financial quarters. Apple is doomed forever.

        If Apple gets a foothold into India the same thing will happen. Only the cheaper Android smartphones will matter and Apple will be considered the biggest loser with the least market share. No matter what Apple does it will be seen as a future loser by Wall Street. It’s just stupid how Apple is always singled out to be the big loser while other companies get a free pass on the future.

    2. $USD strengthening can also boost sales in the short-term, if expectations are that local prices will jump again soon due to unfavourable exchange rates. I myself am getting a 6s now, rather than wait for the 7 like I was planning to.

      The flip side: incredibly, Apple Canada still hasn’t adjusted their iPad prices in almost 2 years to reflect the falling $CAD, so an iPad Air 2 still starts at $549 CAD. Check out what that converts to in USD these days, and even with taxes (5% if you buy in Alberta, 13% for Ontario, etc) it’s cheaper for Americans to buy one if already visiting Canada, than to buy in the US.

      1. We have been watching the currency and oil. We are driving down from Alaska for vacation this next summer and the Mall in Edmonton is one our targets, along with some of your beautiful Canadian countryside. There hasn’t been an opportunity like this in ages.

        1. Welcome, and enjoy the trip! I’m glad for you that America’s dollar value has improved (sucks for us, of course 😉 ), and hope more will choose to vacation outside the US as a result.

          1. Thank you. Banff and Jasper Parks, along with Niagara Falls, are also on the list, and with the 30% discount relative to the Canadian currency at the moment, we just cannot pass up the opportunity.

    3. OMG, China is tanking! They are no longer growing at 12 to 15% per year. Their growth rate is now only 4 to 5% ! But the entire rest of the world would be delighted to have grow at a “paltry” rate of 4 to 5% per annum over the past 8 years since the Great Recession.

      Even if China growth flattens or turns negative, the country of 1 billion people will still have many wealthy people, and many middle class people, too, all of whom will likely continue to buy Apple products. The poor were probably never likely to buy an Apple product, anyway. So fears of the Chinese failing to buy Apple products are misplaced.

      Anyone with a broad perspective on business and macro economics will understand that the rapid growth seen in developing countries eventually taper as they modernize and the costs of labor and other factors of production eventually rise.

      The rest of the world has outsourced its local pollution, made an end-run around tight local regulatory supervision (re plant construction, hiring/firing decisions, OSHA, minimum wage, etc.), avoided high local health care & retirement costs, and is playing wage arbitrage by making stuff in China where there are few pollution controls, no real regulatory oversight, comprehensive health care system, and very low wages.

      Well, folks, something’s gotta give. As China matures into a modern society, their growth rate must slow. But that is probably a good thing for the rest of the world, anyway. Right now, we are benefiting from China’s previous backwardness. But as climate change hopefully makes abundantly clear, we are all one goal community. So China’s maturation into a modern society, including a more modest, but sustainable, growth rate should not frighten anyone.

  1. It is still “us” and “them”.
    We see Apple for the greatness.
    They see Apple for all the other things we just DO not see.
    It’s quite racist [the qualities that make racists racist that is] when you think about it.

  2. There is no mention that Apple will be buying back more shares than ever during this period.
    As a result we may see an enhanced dividend since the cost will be reduced during to the lower share count. will cost them. Apple usually announces an increase in the dividend rate in the April quarterly results release.

    1. It is important to differentiate between a downturn in the market and a decline in a single stock.

      I’ve always thought Apple shares held up pretty well during economic downturns. Sort of a retreat to quality. People _know_ where Apple makes its money. Hardware, software, services. Huge global diversification. Nice balance of older and newer products. Excellent product replacement expectations. Good product value story. Nice growth relative to competition. Quality production. Fabulous fundamentals. Great long-term business prospects. Loyal customers. Solid management. Seemingly big plans for the future. Proven track record.

      What’s not to like?

  3. Consumer spending is increasing rapidly in China as it transitions from an export economy to a consumption economy. Confusing the Chinese stock market with the growing middle class is a mistake. All indicators are suggesting continued rapid consumer spending growth. China will be just fine for Apple for a long long time.

  4. I’m not getting a heart attack. I’m merely pissed as to why Wall Street keeps trying to set up Apple for failure. It’s just unfair. I don’t know if they’re doing it because they’re stupid or simply criminals trying to cheat honest investors. How can companies with poorer fundamentals be valued far higher than those with better fundamentals? In theory it shouldn’t be able to happen and outside of Wall Street it doesn’t. No one should be able to turn a dime into a dollar by using some multiple for future value. That can only represent a false value. Investors seem to really like false value, the higher the better, and that puzzles me.

  5. A 9% drop in AAPL in just this month over fears of Apple profits coming in $100M less than the originally predicted $18+B all-time world record for any company ever. Yeah, that makes sense. Everyone go buy Google at its incredibly elevated P/E…

    Logic is severely undervalued these days.

  6. It’s obvious manipulation and it works because people listen to them. What I don’t understand is why Apple is the main target? Is it just because they’re so well known that the people who listen to the nonsense will be more worried?

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