Apple stock: what's goin' on?

[bigjnyc]

I'm sure investors expected the iPhone to be released in June and that was priced into the stock, the july 11th announcement had a lot to do with the price drop. you'll see it pick up again as launch date gets closer and the hype starts picking up with people talking about making lines.

 

[Melrose]

It's not uncommon in a time of crisis for the more timid elements to run for cover.

I don't think a dip in Apple stock is anything to worry about. Just think if you had bought a few thousand shares back in the earlier nineties? The market goes up and down - that's just the way it goes - you have to look at the long term growth. Apple is a solid company.

 

[IJ Reilly]

A lot of traders and multi-billion dollar hedge funds buy and sell on gossip and speculation, so yeah, this kind of thing does have an impact on price.

AAPL stock is down because of three things 1) there is no way WWDC could have lived up to the hype that had built up beforehand 2) the overall market is trending down lately and 3) the rumors about Steve Jobs's health.

There are many times when a catalyst is obvious. In this case AAPL's recent fall cannot be attributed to the broad market. Apple was riding high during the past few months while the rest of the market was in the doldrums.

A lot of people are worried for a number of reasons, and therefore they are taking profits in AAPL.

The institutional traders move in and out of stocks regularly for reasons of their own. They follow momentum, not value.

As for your three reasons, only (2) makes any sense to me. The "hype" turned out to be almost 100% accurate, and as I said before, the question of Steve's health is simply a speculative distraction. Anyone who trades on speculation gets what they deserve.

 

[jb60606]

Does anyone know what the profit margins are on the iphone? What it costs Apple to produce?

I think AT&T may be in a better position to capitalize on the growth of the iPhone than AAPL. Look at the two year contracts, and the annual rates subscribers will be paying. Apple is selling the razor, but AT&T is selling the razor blades which is an ongoing income for AT&T.

Apple gets $430 from AT&T for every iPhone contract. On top of the $400+ they make on the iPhone alone, Apple comes out ahead, and then some ($800+ for every iPhone sold). They wouldn't have promised their product to a single wireless carrier without additional incentive.

 

[megfilmworks]

Anyone who trades on speculation gets what they deserve.

The stock market as a whole trades on speculation.
P+E's are ignored. Coming in under the speculation (even with a healthy profit) causes a downturn. It's been that way for quite a few years now.
Speculation and rumor are big drivers on the Street, both for the single trader and the large institutional fund managers.
Also, fund managers do not follow momentum, they create it.

 

[IJ Reilly]

The stock market as a whole trades on speculation.
P+E's are ignored. Coming in under the speculation (even with a healthy profit) causes a downturn. It's been that way for quite a few years now.
Speculation and rumor are big drivers on the Street, both for the single trader and the large institutional fund managers.
Also, fund managers do not follow momentum, they create it.

This is the difference between trading and investing. Over time investors will do fine so long as their investments are sound and they don't become swept up in speculation-driven trading.

 

[Kinderhauz]

Now its dropping you lot all go out and invest in some Apple stock! Now! Go!

Come July 11th it will rise 10%, when will only go higher as APPL gets more $$$ from the 3G iPhone in 70 new countries

I agree that Apple is a buy now, but I think that the iPhone's international potential of the iPhone is at least partially priced in to the stock already. The market anticipates those kind of things.

 

[megfilmworks]

I agree that Apple is a buy now, but I think that the iPhone's international potential of the iPhone is at least partially priced in to the stock already. The market anticipates those kind of things.

Absolutely, If Apple doesn't make the 10 million mark on iPhone sales then the stock will drop back to around 120 or so, IMHO.
When the Street predicts performance, you'd better beat it or lose value.
And I agree with J.J. about the difference between long term and short term investing. Although even long term investing requires speculation. All investing is a form of speculation. There are NO guarantees.... remember Lucent??

 

[IJ Reilly]

All investing is a form of speculation. There are NO guarantees.... remember Lucent??

Point taken -- not just Lucent, but Worldcom, Enron, and how many others. Which is why I qualified this observation with the assumption that the investment is fundamentally sound. This of course is one of the tricks of investing.

There are three firm rules of successful investing -- unfortunately, nobody knows what they are!

One thing I can say with confidence though is that for small investors, getting caught up in the fear-greed continuum is a sure way to get scorched.

 

[Sun Baked]

Apple is also one of the few companies running the old blue chip fundamentals.

They fixed the company by eliminating debt and reducing cost, they didn't follow the current public models of buying market share and growth with debt.

Or in the case of Lucent, spin off underperforming division "holding the company back"

While there is some speculation keeping the stock price high, the CEO hasn't fallen into the Wallstreet trap and grabbing at all straws for more revenue nor is he looking at listening to the currents version of Chainsaw Al that say they can quadruple the stock price.

Fundamentals are there to keep the company sound long term.

But, market darlings tend to get punished more than other companies if they don't maintain the markets expected growth.

 

[megfilmworks]

There are three firm rules of successful investing -- unfortunately, nobody knows what they are!

LOL, quote of the day!