Apple Stock Tanks: Biggest Drop in Seven Years

[Unspeaked]

Thought I'd post this since no one else seems to have: Apple shares have tanked - their biggest single day drop in seven years - due to some downgrades and an anticipated decrease in consumer spending:

LINK

Apple tumbles on consumer spending concerns
Monday September 29, 11:57 am ET

By Jim Finkle
BOSTON (Reuters) - Apple Inc shares tumbled 16 percent on Monday, their biggest drop in seven years, amid concerns the maker of Mac computers and other consumer electronics will suffer as the economy slows.

Two brokerages cut their price targets, earnings forecasts and stock recommendations on the company, which also makes iPod music players and iPhones.

"We worry that consensus estimates have not been revised down to reflect slowing global consumer demand and that a broadly positive investment bias ... limits upside to (Apple) shares over the next three to six months," said Morgan Stanley analyst Kathryn Huberty.

She said that Wall Street remains overly bullish on shares of Cupertino, California-based Apple, with 27 of 32 analysts "overweight" on the stock. Morgan Stanley cut its price target to $115 from $178 and its recommendation on Apple to "equal-weight" from "overweight".

She also cut her fiscal 2009 profit forecast to $5.47 per share from $5.91.

Including Monday's decline the stock has lost more than one third of its value over the past month.

RBC Capital analyst Mike Abramsky said in a note to investors that the percentage of consumers planning to buy a personal computer over the next 90 days who intend to get a Mac rather than PC from another manufacturer posted its biggest decline in the last two-and-a-half years from August to September.

He cited results of a monthly survey that his firm conducts with research firm Changewave that looks at demand for PCs from Apple, Dell Inc, Hewlett-Packard Co and other manufacturers.

Abramsky downgraded the stock to "sector perform" from "outperform" and cut his price target to $140 from $200.

He cut his earnings forecasts for 2008, 2009 and 2010. Shares of Apple fell $20.36 to $107.88 in heavy morning trade on Nasdaq.

Hewlett-Packard, the world's biggest PC maker, fell 1.9 percent on the New York Stock Exchange and Dell fell 4.3 percent on Nasdaq.

Research in Motion Ltd, maker of the iPhone rival BlackBerry device, fell 3.3 percent on the Toronto Stock Exchange.

[edesignuk]

Seems pretty much inevitable really. People aren't spending like they were and they aren't likely to be for a good while yet.

[t0mat0]

Those shorting AAPL finally able to move from that position?
With the accounting for iPhones, Apple has some money coming in regularly from the sales, which will be beneficial. They're moving to sell more internationally too, so whilst the percentage sales per country might be less, they are selling in more places, and not just the iPhone. We'll have the stats for the current quarter soon enough, and hear the forecast for the next quarter.

[iGary]

I sold $60 ago.

Guessing I should pick some up.

[aufmobi]

this is pretty rough, it's hard to look at my investment as a long term option now when the stock has fluctuated +/1 $100 this year alone.

Who else is banging their heads into the wall right now for not selling back at $200?

[IJ Reilly]

This is insane. Apple will be releasing earnings in a couple of weeks and I don't believe they will show anything to back up these dire predictions.

[SirOmega]

IMO, AAPL at $100 is undervalued by at least $30-40. iPod sales are flat y/y but iPhone is doing well and Mac sales are very good. We'll see what happens October 14th with respect to mac sales and what price cuts Apple has in store to counter any perceived or real sales drop.

[Consultant]

So did the stock market in general.

What you are seeing is the overall trend of selling.

[IJ Reilly]

Originally Posted by Consultant

So did the stock market in general.

What you are seeing is the overall trend of selling.

Is the market overall down by that much? I don't think so.

[rhett7660]

This is insane. Apple will be releasing earnings in a couple of weeks and I don't believe they will show anything to back up these dire predictions.

I was thinking the same thing when I read this. I first saw this, this morning when I was checking my stocks. Oh well, time to buy some more thou. It will be interesting to see when Apple releases it's earnings what the stock does and more importantly how the industry treats the earnings.

[Dave00]

This is total garbage. It's not based on anything other than two analysts saying, "Hey, in a poor economy, people spend less money." What a revelation. You buy or sell a stock based on fundamentals, such as earnings, growth potential, etc. The fundamentals haven't changed. Apple has billions of dollars in cash right now at a time when many other tech companies are short. They have a huge market for expansion. And they've continued to grow over the past year when other companies have stagnated.

Now is a great time to buy the stock, especially if you have a long view (as you should). Might it go even lower, especially over the next three to six months? Sure. But in 3-5 years, it will be much, much higher. Price hasn't been this low since May, 2007, and that was before the success of the iPhone and the huge growth in desktop & laptop sales.

It's a fire sale on all kinds of stocks. Look at NVDA! Those with cash to invest now are going to be richly rewarded.

[rdowns]

I'm still long. With a cost basis of around $11, I'm still happy. We'll get this bailout bill behind us and march back up.

[IJ Reilly]

Originally Posted by rhett7660

I was thinking the same thing when I read this. I first saw this, this morning when I was checking my stocks. Oh well, time to buy some more thou. It will be interesting to see when Apple releases it's earnings what the stock does and more importantly how the industry treats the earnings.

Well obviously the market mood is exceptionally bleak, but when the stock of one of the fastest growing large companies in the world is being dumped this quickly you have to wonder what's going on in the minds of investors. Only a few weeks ago AAPL was at $180. The big problem with this kind of abject and irrational fear is that it's difficult to reverse.

[iGary]

Originally Posted by IJ Reilly

Well obviously the market mood is exceptionally bleak, but when the stock of one of the fastest growing large companies in the world is being dumped this quickly you have to wonder what's going on in the minds of investors. Only a few weeks ago AAPL was at $180. The big problem with this kind of abject and irrational fear is that it's difficult to reverse.

I agree. It's actually starting to sink in with people. People don't trust the market with their money.

[akm3]

Originally Posted by rdowns

I'm still long. With a cost basis of around $11, I'm still happy. We'll get this bailout bill behind us and march back up.

I'm envious of both your cost basis AND your avatar. You are a double-threat

My cost basis is 120.90 which I thought was fantastic. Being up 55%+ to now being down is quite painful, but thats the rollercoaster of Apple. I think this is a huge overreaction though, and although it might go lower - I think the next set of financials will really bring some buyers back in.

[Peace]

Originally Posted by iGary

I agree. It's actually starting to sink in with people. People don't trust the market with their money.

I agree completely and I believe investors see Apple as the poster child for stocks in general. No trust in the market and Apple goes down,down,down.
The good part is as soon as confidence shows back up Apple stock will skyrocket.

I'd call Apple as a "hold" on for your dear life. It will get better.

[IJ Reilly]

My cost basis is even lower than $11. About half that. But this does not make me feel any better about seeing nearly half of my paper profit on AAPL vanish over the course of a few weeks. The last time I went through this was almost exactly eight years ago, when AAPL dropped as much in one day. That drop was based on some actual bad news though, not just general fear and loathing (of which there was plenty in the market back then too). It took literally years for it to recover. Unless the stock bounces back quickly I'm afraid this could be a psychological turning point for AAPL.

[acrafton]

If the doom and gloomers are correct we are in for either a great depression (wallstreet bailout doesn't pass) or a long recession (wallstreet bailout passes). Either way we know:

1. Credit will be tighter for all (a good thing as it is why we are in trouble)
2. Consumers will be spending less on non-essentials
3. Times will be tight for many
4. Apple is used by many day traders as a proxy for tech in general which adds volatility to the stock and if traders think tech overall will go down (given 1-3 it probably will), the traders will hit Apple.

All of those are negative for Apple. . .which was clearly overpriced at $200 and is probably a buy at $100 or so.

Note that I don't hold any Apple at this time and posted a while back when it was whipsawing at $150-200 that it was just as likely to go to $100. . .I have an order in at $105.

[cenetti]

Originally Posted by acrafton

I have an order in at $105.

You got your fill eh?

[IJ Reilly]

Anyone who thinks they know when a stock is "overpriced" is deluding themselves, and possibly others, if they listen. The markets decide what a stock is worth on any given day. This is their sole function. The market price is the only price that matters. Everything else is just guessing.

[bigjnyc]

I sold short at $194 and covered thir morning at $101 gonna go out and celebrate later and i'll be upgrading to a macbook pro when the new revisions come out

[acrafton]

Originally Posted by cenetti

You got your fill eh?

I did but not at the low. . .which I am ok with. Filled at 104 and change. . .looks like it hit 100 earlier.

[acrafton]

Originally Posted by IJ Reilly

Anyone who thinks they know when a stock is "overpriced" is deluding themselves, and possibly others, if they listen. The markets decide what a stock is worth on any given day. This is their sole function. The market price is the only price that matters. Everything else is just guessing.

And who is the 'market' but a bunch of folks with opinions. My opinion (guess) when Apple was over 150 was that it was overpriced and if I waited it would come down. I was right, but not in the way I thought. I simply presumed it would drift down. . I will take the 25 buck drop today and say thanks.

After rereading your post, I think I agree. I didn't know, just guessed that for me $150 was too rich.

Now on to the moon.

[IJ Reilly]

Originally Posted by acrafton

And who is the 'market' but a bunch of folks with opinions. My opinion (guess) when Apple was over 150 was that it was overpriced and if I waited it would come down. I was right, but not in the way I thought. I simply presumed it would drift down. . I will take the 25 buck drop today and say thanks.

After rereading your post, I think I agree. I didn't know, just guessed that for me $150 was too rich.

Now on to the moon.

More a herd mentality than a collection of opinions, which I think is an important distinction. Guessing is certainly a better way of explaining it. When I bought into AAPL for the first time in 1997, I wasn't pretending to know that the stock was "undervalued," I was guessing that the upside potential was greater than the downside risk. Whenever a stock makes a big more in either direction, boards like this are full of people who "knew" it was going to happen. Sure. And stopped clocks are right twice a day, too.

[twoodcc]

wow, this is crazy. i knew it would go down, but man!