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Analysts Share in Blame for Apple's Stock Drop, Says Fortune

MacRumors

MacRumors

macrumors bot
Original poster
Apr 12, 2001
63,536
30,843



The 10% drop in Apple's share value following the company's earnings release earlier this week was not entirely the fault of Apple, Fortune suggests, but rather that of overheated analyst predictions.

fortune-worst.png

Fortune assessed the accuracy of the predictions made by 68 analysts, and found that revenue figures ranged from $51.7 billion to $65.69 billion against Apple's actual performance of $54.51 billion. It produced a ranking of the analysts by the percentage errors in their predictions for both revenue and earnings per share, as well as overall performance metrics.

The analysts responsible for the sometimes wildly optimistic forecasts were not, said Fortune, doing Apple any favors.
The company didn't have a bad quarter. In fact, it posted its best quarter ever ... But the stock market is an expectations game and Apple is expected to blow past analysts' estimates, not miss them.
Click to expand...
The Fortune piece wryly observed that 'another way of looking at it is that Apple's analysts did worse than the company this quarter.'

Going forward, Apple has altered the way in which it provides guidance for upcoming quarterly performances. While the company had previously issued single "conservative" guidance estimates for both revenue and earnings that led to the expectation that Apple would always handily beat that number, it is now providing a range of guidance numbers for revenue and other factors.

Apple believes that the range will provide a more realistic idea of where the company expects performance to fall, although it is no longer providing any specific earnings per share guidance and instead allowing analysts to develop their own numbers based on the ranges of revenue, margin, expenses, and tax rate the company expects.

Article Link: Analysts Share in Blame for Apple's Stock Drop, Says Fortune
 
Article Link
https://www.macrumors.com/2013/01/25/analysts-share-in-blame-for-apples-stock-drop-says-fortune/
Tankmaze

Tankmaze

macrumors 68000
Mar 7, 2012
1,707
351
But the stock market is an expectations game and Apple is expected to blow past analysts' estimates, not miss them.
Click to expand...

so analyst would predict an expectation like say... 10000% growth for apple and when it doesn't meet their expectation, the stock plummet ?
good job analyst ! :rolleyes:
 
AppleAlfred

AppleAlfred

macrumors member
Nov 23, 2012
80
16
Canada
Simplicated said:
Exactly. These analysts set an impossible-to-meet target and then cause the stock to plummet. That's why I hate these m**********rs.
Click to expand...

The analysts don't "cause" the stock to plummet, it's all the stupid traders selling the stock because it doesn't meet expectations. If people knew anything about investing, they would realize that Apple is now way undervalued and is still a solid company. I'll be gobbling up as many shares as I can, and if you've looked a lot of analysts still have much higher targets on Apple.
 
kas23

kas23

macrumors 603
Oct 28, 2007
5,629
288
The problem with MacRumors is that it chooses to exclude certain news stories. The news stories presented usually paint a rosy picture for Apple. So, when people see the stock prices fall, they become confused. They then start searching for excuses. MacRumors should also be reporting this:

http://www.businesswire.com/news/ho...tics-Global-Smartphone-Shipments-Reach-Record

And this:

http://www.businesswire.com/news/ho...phones-Heated-Vendor-Competition-Characterize

Once people read these articles, they'll be more prepared to see a falling Apple stock price instead of looking for excuses.
 
Last edited by a moderator:
jm001

jm001

macrumors 6502a
Sep 19, 2011
596
123
What's your point? Both articles were positive for Apple and actually the first article was covered (the data at least) by Macrumors several days ago.
 
JGRE

JGRE

macrumors 65816
Oct 10, 2011
1,012
664
Dutch Mountains
Analysts think they have to comment any company even if they they don't understand squad about the strategy and performance of the company. They only want to bring sensational stories which make them look good. It is all about sensation and greed. :mad:
 
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notjustjay

notjustjay

macrumors 603
Sep 19, 2003
6,056
167
Canada, eh?
This shouldn't surprise anybody. We go through this right here on these forums with every Apple product launch.

It's always the same. In the weeks before the product launch, the rumors start flying. The new product will have a brand new design! It'll be thinner! Lighter! With twice the power! And there will be a price drop! And a spec bump across the line! The whole line-up will be updated! No, replaced! No, this is going to be the start of a brand new product category! Here are some product mockups. Here's what these could look like!

Then the discussion starts flying. "Here's what I'd like to see!" People start predicting entire product lines, including estimated pricing, and start drooling about how awesome it's all going to be.

Then the product announcement happens. It's a new version number with a reasonable spec bump. The form factor is the same as last year's model but the price drops slightly. It's a competitive upgrade, but nothing revolutionary.

And then the complaining starts... What happened to the revolutionary new design? What happened to the brand new product line? We're so disappointed!

Nothing "happened to it". You guys made it all up in the first place. There's no way those expectations could ever have been met.

Every. Single. Time.
 
Greg.

Greg.

macrumors 6502
Sep 12, 2010
404
54
London, UK
MacRumors said:
[url=http://cdn.macrumors.com/im/macrumorsthreadlogodarkd.png]Image[/url]


The 10% drop in Apple's share value following the company's earnings release earlier this week was not entirely the fault of Apple, Fortune suggests, but rather that of overheated analyst predictions.


Fortune assessed the accuracy of the predictions made by 68 analysts, and found that revenue figures ranged from $51.7 billion to $65.69 billion against Apple's actual performance of $54.51 billion. It produced a ranking of the analysts by the percentage errors in their predictions for both revenue and earnings per share, as well as overall performance metrics.

The analysts responsible for the sometimes wildly optimistic forecasts were not, said Fortune, doing Apple any favors.The Fortune piece wryly observed that 'another way of looking at it is that Apple's analysts did worse than the company this quarter.'

Going forward, Apple has altered the way in which it provides guidance for upcoming quarterly performances. While the company had previously issued single "conservative" guidance estimates for both revenue and earnings that led to the expectation that Apple would always handily beat that number, it is now providing a range of guidance numbers for revenue and other factors.

Apple believes that the range will provide a more realistic idea of where the company expects performance to fall, although it is no longer providing any specific earnings per share guidance and instead allowing analysts to develop their own numbers based on the ranges of revenue, margin, expenses, and tax rate the company expects.

Article Link: Analysts Share in Blame for Apple's Stock Drop, Says Fortune
Click to expand...

Having worked as an equity research analyst, I can tell you all of the worst offenders shown here are not real analysts and give the profession a bad name.

Traderhood: Seems to be some dodgy forum for people who are long APPL. No idea how they're getting published like they're official.

Gregg Thurman: Independent, says it all. No real clients to answer to so no pressure to get calls right. Almost definitely long AAPL based on his SeekingAlpha posting history and so clearly adds up to being mega-bullish when he can. He also has a thread of MacObserver where he guesses where AAPL will go based on historical trend data - seems legit?! :rolleyes:

Bullish Cross Research: So just a random blog, with the first title I spot being 'Apple $1000: why it's time to buy'. Scanning through, it's more of the same. I seriously don't get how they get treated like they're official!

Braeburn Group: Familiar as repeat offenders every time when it comes to AAPL estimates. Basically a group of people long AAPL (they disclose this) grouping together to write pro-AAPL stuff. Their current price target is 85% above todays stock price.

Alexis Cabot: Again independent, same story.

Asymco: Based on his twitter, looks like he's stopping making estimates. Convenient.

etc. etc.

Overall it's all a bit of a mess. Getting forecasts right is like throwing darts blindfolded. The old status quo was everyone on the buy-side held AAPL and so the sell-side made bullish reports to please their clients. Apple gave conservative estimates which they then of course beat, stock goes up, everyone happy. Basically Apple have now said this will no longer be the case, so hopefully we'll see accuracy improve and ensure the long-AAPL independents can no longer be praised and given media attention when their above consensus estimates come in.
 
ovrlrd

ovrlrd

macrumors 65816
Aug 29, 2009
1,384
146
kas23 said:
The problem with MacRumors is that it chooses to exclude certain news stories. The news stories presented usually paint a rosy picture for Apple. So, when people see the stock prices fall, they become confused. They then start searching for excuses. MacRumors should also be reporting this:

http://www.businesswire.com/news/ho...tics-Global-Smartphone-Shipments-Reach-Record

And this:

http://www.businesswire.com/news/ho...phones-Heated-Vendor-Competition-Characterize

Once people read these articles, they'll be more prepared to see a falling Apple stock price instead of looking for excuses.
Click to expand...

Actually they have reported similar articles in the past, the problem is that they have almost no relevance as to the recent stock changes and have no reason to be mentioned in this kind of context. Market shares and vendor shipments have very little impact in stock market value, as hard as that is to understand.
 
R

Ryth

macrumors 68000
Apr 21, 2011
1,591
157
Greg. said:
Having worked as an equity research analyst, I can tell you all of the worst offenders shown here are not real analysts and give the profession a bad name.

Traderhood: Seems to be some dodgy forum for people who are long APPL. No idea how they're getting published like they're official.

Gregg Thurman: Independent, says it all. No real clients to answer to so no pressure to get calls right. Almost definitely long AAPL based on his SeekingAlpha posting history and so clearly adds up to being mega-bullish when he can. He also has a thread of MacObserver where he guesses where AAPL will go based on historical trend data - seems legit?! :rolleyes:

Bullish Cross Research: So just a random blog, with the first title I spot being 'Apple $1000: why it's time to buy'. Scanning through, it's more of the same. I seriously don't get how they get treated like they're official!

Braeburn Group: Familiar as repeat offenders every time when it comes to AAPL estimates. Basically a group of people long AAPL (they disclose this) grouping together to write pro-AAPL stuff. Their current price target is 85% above todays stock price.

Alexis Cabot: Again independent, same story.

Asymco: Based on his twitter, looks like he's stopping making estimates. Convenient.

etc. etc.

Overall it's all a bit of a mess. Getting forecasts right is like throwing darts blindfolded. The old status quo was everyone on the buy-side held AAPL and so the sell-side made bullish reports to please their clients. Apple gave conservative estimates which they then of course beat, stock goes up, everyone happy. Basically Apple have now said this will no longer be the case, so hopefully we'll see accuracy improve and ensure the long-AAPL independents can no longer be praised and given media attention when their above consensus estimates come in.
Click to expand...

Correct.

Which is why there needs to be some sort of filter on these people because a lot of them post false stories and other rumors that have no merit but tout them as factual without even being required to verify sources and so on.

There is no accountability from these individuals, nor their institutions if they have one.

Like you said, those analysts that have clients to answer to, don't try to make ridiculous predictions.

I think a good start is for sites like MacRumors, Apple2.0 and so on to not give these amateurs any ammo by not even mentioning them or their articles.
 
B

bflowers

macrumors 6502a
Jul 19, 2006
636
136
Kind of makes you wonder if stock holders couldn't sue the analysts for price manipulation... I mean, these people get paid big money, and directly impact the savings and investments of millions, to the tune of billions of dollars, all based on stuff they make up or pull out of their rears! :eek:
 
Greg.

Greg.

macrumors 6502
Sep 12, 2010
404
54
London, UK
Ryth said:
Correct.

Which is why there needs to be some sort of filter on these people because a lot of them post false stories and other rumors that have no merit but tout them as factual without even being required to verify sources and so on.

There is no accountability from these individuals, nor their institutions if they have one.

Like you said, those analysts that have clients to answer to, don't try to make ridiculous predictions.

I think a good start is for sites like MacRumors, Apple2.0 and so on to not give these amateurs any ammo by not even mentioning them or their articles.
Click to expand...

I really don't get it. It's like me taking one of the companies I hold stock in right now, loading up excel and creating a forecast without any corporate access. For any other company there's no way I could get this published and counted as part of Wall Street's consensus, but for AAPL this seems to be the case! They should stick to something like Estimize.

I'm not saying analysts are saints, but including all these amateur analysts really distorts the picture in articles like this. The major bank I used to work for who were below consensus and whose numbers got beat with this earnings announcements aren't even on the full chart that Fortune has on it's site - which helps give the impression that every analyst is super bullish and it's a crooked industry.
 
kas23

kas23

macrumors 603
Oct 28, 2007
5,629
288
jm001 said:
What's your point? Both articles were positive for Apple and actually the first article was covered (the data at least) by Macrumors several days ago.
Click to expand...

Those articles show Apple's slipping market share. The growth of Samsung is greatly outstripping the growth of Apple. If one actually looks at the numbers, not just read the headlines, they'll see that these numbers are actually not good news for Apple. The wording of these headlines is the real manipulation here.

Plus, give me a link of where MRs reported these number. They just came out yesterday.

----------
ovrlrd said:
Market shares and vendor shipments have very little impact in stock market value, as hard as that is to understand.
Click to expand...

Yep, paltry market share growth would have no impact on investor confidence in Apple.
 
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I

iMikeT

macrumors 68020
Jul 8, 2006
2,304
1
California
Of couuuuuuurrrrrrrssseeee!!!!!!!!!!!!!

OMFG, many of us on here were saying exactly this and there were the idiots defending these bozos! :mad:
 
sseaton1971

sseaton1971

macrumors 6502
Feb 9, 2012
431
11
kas23 said:
Those articles show Apple's slipping market share. The growth of Samsung is greatly outstripping the growth of Apple. If one actually looks at the numbers, not just read the headlines, they'll see that these numbers are actually not good news for Apple. The wording of these headlines is the real manipulation here.
Click to expand...

Isn't it more about revenue/profit than marketshare? I don't know how the two compare when it comes to actual dollars, but I think that would be a better way to compare the two companies.
 
FireFish

FireFish

macrumors regular
Sep 12, 2007
235
142
Analysts

Bottom line is this:

Analysts cannot be trusted as a sole source for investment planning.
Remember this: They want people to buy Apple; it's good for their business. Unfortunately everyone has their own intentions at heart so you need to go with your gut, . . . and mine sold 80% of my shares @ $586. :apple:

I'm personally waiting for it to hit $420 and I'll probably pick up a few more. :rolleyes:
 
C

carlgo

macrumors 68000
Dec 29, 2006
1,806
17
Monterey CA
A smart anal-ist would talk up expectations, make up all sorts of impossible to meet expectations. At the same time shorting the stock, knowing that Wall Street will panic as it always does.
 
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