Thursday, October 11, 2012

Why Apple Inc. (NASDAQ:AAPL)’s Stock Is Tumbling? Few Reasons Worth Mentioning

Apple Inc. (NASDAQ:AAPL)’s shares are now down by 10% from its latest pre-iPhone high. Suddenly the Apple bulls seem to have gone quiet. Suddenly, there is no one agreeing that Apple is surely going to be the 1st $1 trillion company anymore. It seems like something is going on.  However, shares of AAPL were rebounded about 2% from the recent lows.

Some of the reasons that may be playing behind the scenes are:

iPhone 5 is now ancient history and investors do not seem to have any major product declarations to look forward to for the moment. Earlier this year, investors have been expecting three major product catalysts from Apple, namely, the iPhone 5, the iTV and the iPad 3. iPad 3 and iPhone 5 have been released. The much-talked-about iTV has disappeared from everyone’s radar screen. If news starts to leak that Apple is about to roll out the iTV this year or early next year, investors may show excitement again. Else, it is more of a ‘buy the rumor’ and ‘sell the news’ kind of thing.

The initial sales of iPhone 5 were not satisfying. The sales number for the first weekend was 5 million. It was exceptionally worse that the ‘worst case scenario’ as cited by Wall Street’s top analyst. The number was way below expectations, irrespective of the issue being flaccid demand or supply problems. The disappointing release sales are likely to indicate that Apple will post abysmal overall iPhone sales for the September quarter.

Supply problems are resulting in concerns about iPhone sales in the last quarter of this year. The consensus estimate has been that Apple will sell over 50 million iPhones in the last quarter of this year. A month back, most people were of the opinion that this estimate is conservative. However, given ongoing reports of supply and manufacturing issues, and the percentage of iPhone 5 buyers, who are under agreement with mobile carriers and hence cannot upgrade as of now, it would not be a surprise if investors start worrying about Apple not hitting 50 million number in the December quarter. 


  1. The analysts who hyped too much are to blame. Had Gene Munster not "predicted" that Apple could sell 8 million iPhone 5, the market would have been very happy after the launch weekend that it sold a record 5 million. People like Munster who claimed to have the inside track, they would have known that Apple did not have more than 5 million iPhone 5 to start with. So why predict 3 more million just upset the market after the weekend. The same goes on for earnings expectation, iPad Mini rumor, etc.
    People just have to look at the fundamentals, the cash pile, the future sales of a highly wanted product and the market potential in China.
    Just stop listening to these analysts and only pay attention to the real things. You will win in the end

    1. China was also on many investors' lips when it came to Apple's stock price/hype. But China has turned out to be a HUGE dissapointment for Apple as well.
      Articles don't talk about that, because it's not as glitzy/reader-grabbing as an article about the iPhone5 (be it good or bad).

      Furthermore, the "shortages" of "only" 5 million are artificially-created by Apple as a marketing tactic to make it look like it's just flying off the shelves (similar to disco clubs creating artificial lineups outside to make it seem like they are more happening than they really are).

  2. Wall streets top analyst is a buffoon and his estimates are worthless. Lets see some other company on the planet sell 5 million "anythings" in one weekend.

    1. Samsung sold 9 million Galaxy S3's in preorders alone (iPhone tallied 2 million).

      It's not about who sold how many, but rather what was expected of the company (which was reflected in its stock price). When the company dissapointed, the stock price reflected that. Noone is saying that Apple didn't sell many phones, just that it sold far, FAR fewer than expected (which was actually predicted in many places, seeing as Apple has fallen further and further behind the smartphone curve in the past 2 years).

  3. There is a trend of Apple stock being depressed 10-15% after a much anticipated launch, before earnings and after reaching an all time high share price. I agree that in the past, the shortage of iPhones was a marketing tool, but the fact is that AT&T stores are out of car chargers, screen protectors etc. For AT&T, this is where they make money, other than monthly service fees. It is just an observation I made. Bottom line is that without fail, if you buy Apple now, youll make money. It may drop another 10%, or it may have hit a bottom last week, who knows, but buying Apple right now is a smart move .


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