Apple managed to build a wall underneath the stock

Apple Inc. “reported a great quarter, and from what I saw, there’s a fairly strong possibility based on channel inventory commentary from Apple’s management that the business will report phenomenal Q2’16 earnings as well,” Alex Cho writes for Seeking Alpha. “Apple’s outlook range was in-line with consensus estimates. So investors are pilling back into the AAPL trade.”

“Investors are buying in anticipation of Apple’s 10-year anniversary iPhone. The average portfolio manager’s investment timeframe is roughly 8-12 months, which makes AAPL perfectly suitable for an anticipation trade for a major product release cadence (even for the institutional types as well). I recall a Bloomberg report that mentioned retail investors were the primary participants in the mid-year to September rally,” Cho writes. “So, by extension, it’s likely the whales are just waking from their slumber and piling back into the AAPL trade (haven’t we seen this before?)”

“So, now that we have lived through an ‘Apple first quarter,’ where Apple ‘built a wall’ underneath the stock price, and reassured the Republic of Apple investors a better future, we can finally get on with our lives as some good folks ‘fat fingered’ the buy switch this time around,” Cho writes. “I believe Apple’s management was conservative on its outlook. I make this point because of this key comment on the earnings conference call… When Apple mentions that it subtracted 2 million iPhones in the channel (compared to prior year), and yet shipments were up 5% y/y in Q1’17 – it means the next quarter will be significantly better. Q2’17 is not supply constrained, as AAPL’s production capacity still sits at 75 million units from Q1’17 build-up. I’m anticipating demand will likely replicate the iPhone 6 cycle where q/q units were -18% versus -32% q/q for iPhone 6S. Inventory risk is significantly lower, so even if end-consumer demand were to fall short, we’re not as exposed to ‘channel burn.’ Perhaps results will be much better than what analysts are willing to forecast or what Apple will indicate…”

Read more in the full article here.

MacDailyNews Take: As poorly as 2016 was set up for Apple, expectations wise, 2017 is set up at least as well in the opposite direction. Nice low bars are easy to clear. Apple’s next really big test will be the world’s reaction to “iPhone X.” Knock our socks off, Apple!!!


  1. Sure, Apple has a wall under it but a bunch of dumbass analysts and tech pundits will continue to try and chip away at it. A month ago Apple was the same then as it is now and the Apple prophets were forecasting doom and gloom. Yes, they all had their doubts and fears of how Apple was becoming irrelevant and past its prime in the smartphone market. I understand people have their opinions, but to constantly criticize Apple day after day simply doesn’t make any sense at all. MSNBC and CNBC are always calling for these supposedly genius oddballs to shed the light on how Apple is failing in so many ways. Although I wouldn’t consider selling my Apple stock based on these crazies observations, it certainly does make me nervous.

    If these people don’t think Apple has any growth left, then they should focus on telling investors which stocks to buy without telling investors flat-out not to buy Apple. I have no doubt these so-called prophets cost plenty of potential Apple investors to lose out on the gains. It’s been proven a number of times these people don’t know what they’re talking about. Telling potential Apple investors to ignore fundamentals just seems so foolhardy. Again, these so-called analysts continue to use supplier numbers to gauge iPhone sales although they’ve been told not to trust those numbers.

    I realize Apple isn’t a perfect company and I’m sure there’s room for improvement but these analysts treat Apple like it’s the worst stock an investor could buy while pushing stocks like Under Armour, Chipotle Mexican Grill or GoPro. It’s just crazy the way these people love to gamble on longshots.

    I surely don’t understand why stocks with sky-high P/Es are so popular with investors. A retail investor like myself doesn’t want to play that game. I don’t like what I consider to be a risk. As of yet I can’t figure out why Microsoft has double the P/E of Apple. What makes Microsoft that much better than Apple where there’s no doom and gloom for that company? I could understand a few P/E points higher but double is too much to take.

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