Apple Stock Price Hits Lowest Levels Since 2011, Falls Below $400

[MagnusVonMagnum]

Good time to buy?

I doubt it. I've been warning people I know for over two years to get the heck out of Apple stock. It's been way too high for way too long and was unsustainable without Jobs constantly releasing something new, profits or not. People buy on impulse and what's "popular" now not on actual value and that creates this artificial inflation and deflation effect. I still think it's too high. I could have bought it at $88 several years ago. It's still near $400. That's a HUGE difference.

 

[Rogifan]

Yep. Investors are idiots because they always react disproportionately to third hand information. I say that as an investment analyst.

The thing is that Apple's stock is ridiculously overpriced. At $700, it would take some 13 years of maintaining profits to equal the share price. Microsoft's profits are currently at 3.5 years to equal the share price, which is more in line with every other company.

Apple also has ridiculously low dividen yield compared to the rest of the industry.

So in this case it's not so much that people think Apple is such a bad company, it's just that they were overvalued to stratospheric proportions.

Are Amazon, Google and Netflix "ridiculously overpriced" too?

 

[Dmunjal]

What details?

Apple / saturated market ??????

As I posted earlier, China Mobile = 700,000,000 subscribers - Apple has not scratched the surface.

Of course you leave out the fact that 90% of that 700M can't afford today's iPhone. If they build a phone for the the middle/lower class of China, that WILL impact profit margins, the stock price, and eventually the brand.

 

[Rogifan]

I'll say this again. Revenue doesn't matter. Profits are flat even with rising revenue. That means shrinking margins due to increased competition. That is not good for the stock price.

http://online.wsj.com/article/SB10001424127887324539304578260222730515836.html

January 23, 2013
"Apple recorded a flat profit despite selling 18 million more iPhones and iPads, as it spent heavily to roll out new products to fend off intensifying competition."

How do we know shrinking margins are due to increased competition? Apple released a number of new products late last year. I'm assuming these new products have a higher cost curve in the beginning which would bring margins down?

 

[Apple Corps]

That Apple growth has slowed or become flat... did you even read the post I quoted?

Yes I read it - the phone market for Apple is no where near saturated in a global market.

Not sure if I am missing your point.

 

[CarpalMac]

I remember reading this last year.

Best advice, EVER!

This is the greatest buying opportunity I have ever seen.

Everybody should be taking out home equity lines of credit and using the proceeds to buy Apple stock. See if you can refinance your car loan. Take everything out of your 401(k) and IRA accounts. Buy on margin. Buy options. Take next month's rent money. Do whatever you have to, but BUY!

Not sure what amazed me more at the time - the suggestion or the fact that 19 people "up" voted it!

Love is blind...

 

[Dmunjal]

How do we know shrinking margins are due to increased competition? Apple released a number of new products late last year. I'm assuming these new products have a higher cost curve in the beginning which would bring margins down?

Good point. But competitors are driving faster refresh cycles which means Apple has to keep up innovating new products and the cost curve will get worse, not better. Amd the new products (iPad Mini) have lower margins, too.

Gone are the days that Apple could capture the majority of the market with once a year upgrades.

 

[Newton70]

No the look of it has become stale to Wall Street analysts, tech bloggers and geeks. Other people don't care (except maybe wanting a larger screen size). Microsoft dramatically changed the UI on Windows 8. PC OEM's are throwing all kinds of **** against the wall yet PC sales are in decline. Because people want their cheap PCs and their Start button. They don't care about metro UI or touching the screen on their laptop.

No, the look has become stale to consumers as well. I see the evidence when walking down the street and paying attention to what phones folks are using. The proliferation of the more expensive android handsets cannot be ignored. Also, comparing the PC market to the mobile market is not the best analogy although I see the point you are making.

Is this the end of Apple, certainly not and in Ive I trust. However, it goes without question that the public's perception of Apple has shifted. The competitive landscape has changed and Apple (as well as its competitors) must constantly elevate to the challenge as consumers are a fickle bunch.

 

[Apple Corps]

Of course you leave out the fact that 90% of that 700M can't afford today's iPhone. If they build a phone for the the middle/lower class of China, that WILL impact profit margins, the stock price, and eventually the brand.

I seriously doubt that you have any figures to back up your claim.

25% of 700,000,000 = around 180,000,000 1/2 the entire US population.

Think Different / Think Big

CORRECTION - April 17, 2013 update - CM Subscriber Base now exceeds 1 billion

http://online.wsj.com/article/PR-CO-20130417-905053.html?mod=googlenews_wsj

So 10% of their base = 100 million potential customers. Saturated market ?????

 

[Vorst]

It is almost time to buy stock. People aways seems to buy stock when stock goes up, buy when it is down. Apple is not much different then a year ago. They only problem is that they grew too fast in the 12 months and everybody was expecting too much and analyst still are overestimating.
One of the main reason the stock went down last year and still is, is because of huge profit taking after last year gains, also expected extra US taxes on extensive gains for 2013, triggered the selling.
After summer things will be better and more real.

 

[Oletros]

I remember reading this last year.

Best advice, EVER!



Not sure what amazed me more at the time - the suggestion or the fact that 19 people "up" voted it!

Love is blind...

I think you don't know iGrip, he is pure parody

 

[Steve J0bs]

If he bought at $695, he would be even more glad to have sold at $700

LOL you're right, i understand that. I mean you can't really brag about selling at 700 when you didn't even state what you bought in at. buying at 695 and selling at 700 is less than a 1 percent gain. Even if you bought 50 shares for $34,750 and rode it to $700 you would only make $250 .

 

[Rogifan]

Apple stopped innovating after the iPhone 4's retina display. As much hype as the iPad gets, it hasn't changed since the original. It got a retina display... yay! That's just copied off of the iPhone, not to mention it's a natural progression of technology. Siri, well Apple ripped them off w/ their deep pockets and called it innovation. Name 1 innovation of Apple's since the iPhone 4.

When you take Samsung into account, they think substance first. Each release brings more and new features to the table. S-Pen, S-Beam, S-Voice, multi-window just to name a few innovations. Sorry, but Apple can't think outside of the box. Their 'innovations' are simply just things they buy up, developed by other, smarter people. That's why the public has no confidence in them, and are voting w/ their pockets, i.e. sales numbers.

What's innovative about S-Pen? I seem to remember Windows tablets from the 2000's that had the same capabilities.

 

[Mums]

Only when it goes down or it is also stock manipulation when it was going up?

Of course the bubble was manipulated up and down! You think they wouldn't manipulate the most expensive stock in the world? It's called "naked short selling" - look it up.

They just tanked gold - ask yourself how.

 

[Oletros]

Of course the bubble was manipulated up and down! You think they wouldn't manipulate the most expensive stock in the world? It's called "naked short selling" - look it up.

They just tanked gold - ask yourself how.

Don't tell me, tell them those that only scream "stock manipulation" when it is going down

 

[Steve J0bs]

Poster said he sold at $700 so why not? At least that's a profit, which is more than many have. I bought all my AAPL between $198 and $375 so technically I'm still in profit territory but it's brutal to think how much more I would have made if I had sold near $700, and I almost did.

$5 profit on a $695 stock is hardly worth the risk to reward. . But you are right about at least he made something (hypothetically).

 

[Dmunjal]

I seriously doubt that you have any figures to back up your claim.

25% of 700,000,000 = around 180,000,000 1/2 the entire US population.

Think Different / Think Big

I know China is big and I also know their middle class is growing. But they are still very poor compared to the US.

http://www.worldbank.org/en/country/china/overview

"Yet China remains a developing country and its market reforms are incomplete. In 2011, China’s gross national income per capita of $4,940 ranked 114th in the world; and over 170 million people still live below the $1.25-a-day international poverty line."

I think the US per capita is around $25K.

I agree China is a HUGE opportunity for Apple but not with the current product set. US$600 a phone is a non-starter. It has to be US$200 to gain share in the middle class of China.

 

[TheHateMachine]

Yes I read it - the phone market for Apple is no where near saturated in a global market.

Not sure if I am missing your point.

My point was that the stock price is stale or falling due to the fact that their growth is at this time flat. This was also something the guy I responded to was saying.

Also, the fact that they cannot seem to break into a large market like China because they cannot hammer out a deal with CM and offer a product that is affordable to a large majority of the population doesn't seem to be helping their prospects of growth in a "global market" either. Even then, the steps they must take to even consider pricing a phone for the majority in China is going to be very cheap and more than likely very thin on the margins. We both know that isn't Apple's style.

 

[scoobydoo99]

Let's see....

Steve isn't around to require innovation, the iPhone 5 was disappointing, the only improvements they can think of now are "thinner" and "lighter", and there are rumors of an Apple watch (what next - an Apple abacus?) No wonder the stock is being punished.

WHY is lighter better for the iPhone? There is a reason Rolex doesn't hollow out their watches just to make them lighter - the quality (and perceived quality) would plummet. As the guy said in Jurassic Park: "Are they heavy?" "Yes." "Then they're expensive, put them down." Making the iPhone lighter just because you CAN with no tangible benefit shows a lack of direction, imagination, and innovation. Same goes for the iMac - why thinner? They couldn't think of how to improve the design, so they figured "lets make it thinner! thinner is always better!"

I love Apple. I just don't love the new Apple.

 

[mrxak]

Considering Apple's stock dropped after having their best quarter in history, it's pretty clear this stock is being manipulated like crazy by so-called experts.

It's getting to be about time to buy again. Apple is sure to announce a new product category or service soon, if not several, which will shoot the stock back up. Thank goodness there's suckers who sell low and buy high.

 

[robogobo]

But, but higher profits historically translated to lower AAPL share price. Should lower profit forecast drive the price up?

 

[Apple Corps]

My point was that the stock price is stale or falling due to the fact that their growth is at this time flat. This was also something the guy I responded to was saying.

Also, the fact that they cannot seem to break into a large market like China because they cannot hammer out a deal with CM and offer a product that is affordable to a large majority of the population doesn't seem to be helping their prospects of growth in a "global market" either. Even then, the steps they must take to even consider pricing a phone for the majority in China is going to be very cheap and more than likely very thin on the margins. We both know that isn't Apple's style.

OK - basically I agree with most of that. China may have a larger subscriber base that can afford an upscale iPhone than you are allowing for. Apple has been blathering about this for so long that they have ceded the leverage they once had (hot, new smart phone / CM @ 300 million base) to CM now having 1 billion subscribers and Apple's iPhone no longer novel.

----------

I know China is big and I also know their middle class is growing. But they are still very poor compared to the US.

http://www.worldbank.org/en/country/china/overview

"Yet China remains a developing country and its market reforms are incomplete. In 2011, China’s gross national income per capita of $4,940 ranked 114th in the world; and over 170 million people still live below the $1.25-a-day international poverty line."

I think the US per capita is around $25K.

I agree China is a HUGE opportunity for Apple but not with the current product set. US$600 a phone is a non-starter. It has to be US$200 to gain share in the middle class of China.

But if ONLY 10% of their subscriber base is interested that = 100 million potential Apple iPhone customers.

 

[torana355]

Let's see....

Steve isn't around to require innovation, the iPhone 5 was disappointing, the only improvements they can think of now are "thinner" and "lighter", and there are rumors of an Apple watch (what next - an Apple abacus?) No wonder the stock is being punished.

WHY is lighter better for the iPhone? There is a reason Rolex doesn't hollow out their watches just to make them lighter - the quality (and perceived quality) would plummet. As the guy said in Jurassic Park: "Are they heavy?" "Yes." "Then they're expensive, put them down." Making the iPhone lighter just because you CAN with no tangible benefit shows a lack of direction, imagination, and innovation. Same goes for the iMac - why thinner? They couldn't think of how to improve the design, so they figured "lets make it thinner! thinner is always better!"

I love Apple. I just don't love the new Apple.

Very good post. There are some products that we want to be light and thin like the MBA but making phones that are already light anyway even lighter is grasping at straws. One of the things i loved about the ip4 when i first got it was the way it felt solid and therefore gave it a quality feel, the ip5 feels like a cheap piece of crap.

 

[pipa]

I think at $400 it's a great buy right now. If they ever release a TV set then the stock should hit record numbers.

 

[Apple Corps]

Very good post. There are some products that we want to be light and thin like the MBA but making phones that are already light anyway even lighter is grasping at straws.

Amen - spot on. And enough already with all the CNC diamond bit cut bezel bla bla hype. Not much new.