3 ms·

Apple stock plunges $30. Sky IS falling.

25 points by kirubakaran 19y ago

mattmaroon 19y ago
APPL has been due for a correction for a long time. Their main product achieved market saturation while their P/E ratio continued to soar. Too bad I didn't have the cojones (or the faith in investor intelligence) to short it.
- kirubakaran 19y ago
  AMZN has three times the P/E of AAPL. May be you can short that.
  - mattmaroon 19y ago
    Maybe. I'm not really sure about that one.
- dcurtis 19y ago
  A ton of people would disagree with you.
  - boucher 19y ago
    I would. I also see this as the temporary result of investor panic, recession, etc. Between last week and this week, Apple is in no worse condition personally; the market is. There earnings report was a record quarter, beating even the analysts expectations. Most of the backlash seems to be because they had low estimates for next quarter, but they typically make very conservative forecasts, and they've beaten them consistently for a while now. So I'm hoping/expecting the stock to rebound, slowly, over the next couple months.
    - dcurtis 19y ago
      The estimates weren't even that bad-- look at the year ago estimates. The company is thriving, making tons of money, and growing at greater-than-industry rates. It's pretty crazy how irrational investor behavior can have such a huge effect. A friend of mine at Apple reminded me yesterday that they made 300m on just the interest of their war chest. A few years ago, they were having trouble making that much just on their products.
      - mattmaroon 19y ago
        Their P/E ratio, after the drop, is near 30. You have to grow far above industry rates to justify that. The drop may be caused partially by irrational behavior, but in poker we say that even the blind squirrel finds an acorn eventually. In this case, irrational behavior partially corrected opposing irrational behavior.
      - byrneseyeview 19y ago
        "A friend of mine at Apple reminded me yesterday that they made 300m on just the interest of their war chest. A few years ago, they were having trouble making that much just on their products." That's evidence that they'll stick around, but it's a bad sign when a company makes most of their money from depositing cash in the bank. It's irrational to value $1 of Apple-cash at much more than $1 if the main selling point is that they won't spend it: you can do just as well putting your own money in the bank, and save the brokerage commission.
  - mattmaroon 19y ago
    Hence the initial irrational exuberance.
- mnemonicsloth 19y ago
  Don't beat yourself up about it. A lot of the time, the market can stay irrational longer than you can afford to bet against it. That's why economists are famous for predicting Five of the Last Three Recessions -- they know that a dip is necessary, but not when it's going to start.
  - mattmaroon 19y ago
    That was my thought.
- alaskamiller 19y ago
  Their main product as in their computers? Oh, you're talking about their mp3 players. Yeah, those are quite oversaturated, but funny thing being that they keep pushing refreshes continuously and people still buy them, 22 million of them in one quarter. You heard of this other thing they're selling? iPhone? Their P/E ratio in the past a couple of years have been soaring because of the optimism and momentum people think Steve Jobs bring to the table. Even if it's self correcting it'll just go back up again as Apple cranks more products throughout the year.
  - mattmaroon 19y ago
    I love what happens when anyone presents any sort of anti-Apple sentiment mentality here. The herd stampedes.
  - bp001 19y ago
    Like their $1800 laptop that has about as much utility as the $300 ASUS EEE PC? (ducks) Steve Jobs has done an amazing job turning around the company and much of this enthusiasm is warranted. However, the stock got way ahead of itself. I considered shorting the stock also, but that is just way too risky. A stock only has to double to wipe out the entire investment. And, if a stock is already irrationally high, it could very well go substantially higher in the short term. However, put options may be a good way to bet on the downside while limiting risk. At this point, I do think they are pretty close to an appropriate valuation. If they get another hit with their iPhone and their computer market share increases, they will do very well. But, I think this is far from a sure bet.
- utnick 19y ago
  I think the potential for growth is still huge. Apple laptops are nowhere near saturated. The downsides of owning a non pc have greatly been reduced if not eliminated lately. I think apple laptops could really take off. The iphone is also nowhere near saturated. Many people are waiting for the next release or waiting until their current contracts are over to get one. Also, the apple tv if done right, especially with the movie rental service could become the next ipod.
  - mattmaroon 19y ago
    I thought that too re: laptops until I bought an Apple. The major downside of owning one is the price, and that's the worst downside you can have. There is also the support (I'm sure I'll blog about our company's experiences with that eventually) and the fact that virtualization is expensive (requires windows + parallels) and still imperfect. iPhone isn't saturated, but I'm still bearish on that. And extremely on the TV. Cable VOD has a box in everyone's home already.
    - willchang 19y ago
      A high price tag on the product is the least worst downside you can have if the margins are high. You can always lower the price, but you can't improve the product in other ways if you lack the expertise.
- sabat 19y ago
  Oh, blogga PLEASE. AAPL is no more due a correction than most of the rest of the market. Less, I'd say, considering the company's stellar performance.
  - mattmaroon 19y ago
    Though I disagree with what you say, I'll defend to the death your right to preface it with "blogga PLEASE".
    - sabat 19y ago
      Y'all be my bloggas.
sanj 19y ago
This article: http://www.thestreet.com/pf/newsanalysis/media/10399930.html http://www.thestreet.com/pf/newsanalysis/media/10399930.html Talks about how Apple consistently sandbags its estimates, so it can blow through them later. It sounds very much like Steve Jobs's MO: "Jobs is incredibly and famously promotional when unveiling products, but when he talks numbers he has always been just the opposite -- a conservative player, sandbagging like there is no tomorrow. His dual nature throws people off." But it looks like underpromise/overdeliver has bitten the stock. Time to buy!
- joshwa 19y ago
  Great analyst quote: "The company is lowballing the Street on the March quarter, but this is not a good environment to lowball the market" ...given how pretty much the whole sector is taking a dive today on recession fears.
- ardit33 19y ago
  "But it looks like underpromise/overdeliver has bitten the stock. Time to buy!" --Not really. It just sound that the market is saying: "in time a recession, people have hard time to justify spending 1,700 in a useless laptop, or more money on expensive stuff." Since apple represents the medium and higher end spectrum on personal computers, people will be much much more price sensitive to pricing. The cheapest usable windows laptop, about $400. The cheapest Mac, about $800, making it almost a luxury good. In hard times, it is the luxury stocks that gett the beatings. Apple will have to either sell less laptops and gadgets (fewer people will be able to afford or justify the extra $$), or drop the prices (and margins) to the current products.
  - deleted 19y ago
    [deleted]
  - falsestprophet 19y ago
    You don't understand! The MacBook Air fits in a manila envelope.
  - jfoutz 19y ago
wallflower 19y ago
I see a trend that indicates flattening of revenue + growth Net Sales | Profit 1996 $ 9.8B | -$0.8B 1997 $ 7.1B | -$1.0B 1998 $ 5.9B | $0.31B 1999 $ 6.1B | $0.60B 2000 $ 8.0B | $0.79B 2001 $ 5.4B | -$0.03B 2002 $ 5.7B | $0.07B 2003 $ 6.2B | $0.06B 2004 $ 8.3B | $0.27B 2005 $13.9B | $1.33B 2006 $19.3B | $1.99B 2007 $24.0B | $3.50B *Data from SEC database:
- dcurtis 19y ago
  That's a joke, right?
sabat 19y ago
Two words: buying opportunity.
far33d 19y ago
Please. I bought appl shares at $130 just 6 months ago. 6 months of gain is lost, not 3 years.
willchang 19y ago
We're an educated bunch. Could we not talk about stock price changes in percentages? AAPL fell 17% today.
budu3 19y ago
GOOG http://finance.google.com/finance?q=NASDAQ:GOOG http://finance.google.com/finance?q=NASDAQ:GOOG and JAVA http://finance.google.com/finance?q=NASDAQ:JAVA http://finance.google.com/finance?q=NASDAQ:JAVA too, brace yourself people.
tlrobinson 19y ago
Pssh, that's alright, I got in around $7.50 / share back in '03. Also, it's "only" down $16.75 at the close.
henning 19y ago
I wonder if the OP is short AAPL ;)
Xichekolas 19y ago
ZOMG! Apple stock is going in the the wrong direction! The interwebs will crash! Start buying bottled water and stock your bunker! Seriously, who cares. Markets move in more than one direction.
utnick 19y ago
if you bought aapl stock 1 yr ago and sold it today after the crash you would only be up 65% on the year :) i feel bad for you son

25 points by kirubakaran 19y ago

APPL has been due for a correction for a long time. Their main product achieved market saturation while their P/E ratio continued to soar. Too bad I didn't have the cojones (or the faith in investor intelligence) to short it.

kirubakaran 19y ago
AMZN has three times the P/E of AAPL. May be you can short that.
- mattmaroon 19y ago
  Maybe. I'm not really sure about that one.
dcurtis 19y ago
A ton of people would disagree with you.
- boucher 19y ago
  I would. I also see this as the temporary result of investor panic, recession, etc. Between last week and this week, Apple is in no worse condition personally; the market is. There earnings report was a record quarter, beating even the analysts expectations. Most of the backlash seems to be because they had low estimates for next quarter, but they typically make very conservative forecasts, and they've beaten them consistently for a while now. So I'm hoping/expecting the stock to rebound, slowly, over the next couple months.
  - dcurtis 19y ago
    The estimates weren't even that bad-- look at the year ago estimates. The company is thriving, making tons of money, and growing at greater-than-industry rates. It's pretty crazy how irrational investor behavior can have such a huge effect. A friend of mine at Apple reminded me yesterday that they made 300m on just the interest of their war chest. A few years ago, they were having trouble making that much just on their products.
    - mattmaroon 19y ago
      Their P/E ratio, after the drop, is near 30. You have to grow far above industry rates to justify that. The drop may be caused partially by irrational behavior, but in poker we say that even the blind squirrel finds an acorn eventually. In this case, irrational behavior partially corrected opposing irrational behavior.
    - byrneseyeview 19y ago
      "A friend of mine at Apple reminded me yesterday that they made 300m on just the interest of their war chest. A few years ago, they were having trouble making that much just on their products." That's evidence that they'll stick around, but it's a bad sign when a company makes most of their money from depositing cash in the bank. It's irrational to value $1 of Apple-cash at much more than $1 if the main selling point is that they won't spend it: you can do just as well putting your own money in the bank, and save the brokerage commission.
- mattmaroon 19y ago
  Hence the initial irrational exuberance.
mnemonicsloth 19y ago
Don't beat yourself up about it. A lot of the time, the market can stay irrational longer than you can afford to bet against it. That's why economists are famous for predicting Five of the Last Three Recessions -- they know that a dip is necessary, but not when it's going to start.
- mattmaroon 19y ago
  That was my thought.
alaskamiller 19y ago
Their main product as in their computers? Oh, you're talking about their mp3 players. Yeah, those are quite oversaturated, but funny thing being that they keep pushing refreshes continuously and people still buy them, 22 million of them in one quarter. You heard of this other thing they're selling? iPhone? Their P/E ratio in the past a couple of years have been soaring because of the optimism and momentum people think Steve Jobs bring to the table. Even if it's self correcting it'll just go back up again as Apple cranks more products throughout the year.
- mattmaroon 19y ago
  I love what happens when anyone presents any sort of anti-Apple sentiment mentality here. The herd stampedes.
- bp001 19y ago
  Like their $1800 laptop that has about as much utility as the $300 ASUS EEE PC? (ducks) Steve Jobs has done an amazing job turning around the company and much of this enthusiasm is warranted. However, the stock got way ahead of itself. I considered shorting the stock also, but that is just way too risky. A stock only has to double to wipe out the entire investment. And, if a stock is already irrationally high, it could very well go substantially higher in the short term. However, put options may be a good way to bet on the downside while limiting risk. At this point, I do think they are pretty close to an appropriate valuation. If they get another hit with their iPhone and their computer market share increases, they will do very well. But, I think this is far from a sure bet.
utnick 19y ago
I think the potential for growth is still huge. Apple laptops are nowhere near saturated. The downsides of owning a non pc have greatly been reduced if not eliminated lately. I think apple laptops could really take off. The iphone is also nowhere near saturated. Many people are waiting for the next release or waiting until their current contracts are over to get one. Also, the apple tv if done right, especially with the movie rental service could become the next ipod.
- mattmaroon 19y ago
  I thought that too re: laptops until I bought an Apple. The major downside of owning one is the price, and that's the worst downside you can have. There is also the support (I'm sure I'll blog about our company's experiences with that eventually) and the fact that virtualization is expensive (requires windows + parallels) and still imperfect. iPhone isn't saturated, but I'm still bearish on that. And extremely on the TV. Cable VOD has a box in everyone's home already.
  - willchang 19y ago
    A high price tag on the product is the least worst downside you can have if the margins are high. You can always lower the price, but you can't improve the product in other ways if you lack the expertise.
sabat 19y ago
Oh, blogga PLEASE. AAPL is no more due a correction than most of the rest of the market. Less, I'd say, considering the company's stellar performance.
- mattmaroon 19y ago
  Though I disagree with what you say, I'll defend to the death your right to preface it with "blogga PLEASE".
  - sabat 19y ago
    Y'all be my bloggas.

sanj 19y ago

This article: http://www.thestreet.com/pf/newsanalysis/media/10399930.html http://www.thestreet.com/pf/newsanalysis/media/10399930.html Talks about how Apple consistently sandbags its estimates, so it can blow through them later. It sounds very much like Steve Jobs's MO: "Jobs is incredibly and famously promotional when unveiling products, but when he talks numbers he has always been just the opposite -- a conservative player, sandbagging like there is no tomorrow. His dual nature throws people off." But it looks like underpromise/overdeliver has bitten the stock. Time to buy!

joshwa 19y ago
Great analyst quote: "The company is lowballing the Street on the March quarter, but this is not a good environment to lowball the market" ...given how pretty much the whole sector is taking a dive today on recession fears.
ardit33 19y ago
"But it looks like underpromise/overdeliver has bitten the stock. Time to buy!" --Not really. It just sound that the market is saying: "in time a recession, people have hard time to justify spending 1,700 in a useless laptop, or more money on expensive stuff." Since apple represents the medium and higher end spectrum on personal computers, people will be much much more price sensitive to pricing. The cheapest usable windows laptop, about $400. The cheapest Mac, about $800, making it almost a luxury good. In hard times, it is the luxury stocks that gett the beatings. Apple will have to either sell less laptops and gadgets (fewer people will be able to afford or justify the extra $$), or drop the prices (and margins) to the current products.
- deleted 19y ago
  [deleted]
- falsestprophet 19y ago
  You don't understand! The MacBook Air fits in a manila envelope.
- jfoutz 19y ago

wallflower 19y ago

I see a trend that indicates flattening of revenue + growth Net Sales | Profit 1996 $ 9.8B | -$0.8B 1997 $ 7.1B | -$1.0B 1998 $ 5.9B | $0.31B 1999 $ 6.1B | $0.60B 2000 $ 8.0B | $0.79B 2001 $ 5.4B | -$0.03B 2002 $ 5.7B | $0.07B 2003 $ 6.2B | $0.06B 2004 $ 8.3B | $0.27B 2005 $13.9B | $1.33B 2006 $19.3B | $1.99B 2007 $24.0B | $3.50B *Data from SEC database:

dcurtis 19y ago
That's a joke, right?

sabat 19y ago

Two words: buying opportunity.

far33d 19y ago

Please. I bought appl shares at $130 just 6 months ago. 6 months of gain is lost, not 3 years.

willchang 19y ago

We're an educated bunch. Could we not talk about stock price changes in percentages? AAPL fell 17% today.

budu3 19y ago

GOOG http://finance.google.com/finance?q=NASDAQ:GOOG http://finance.google.com/finance?q=NASDAQ:GOOG and JAVA http://finance.google.com/finance?q=NASDAQ:JAVA http://finance.google.com/finance?q=NASDAQ:JAVA too, brace yourself people.

tlrobinson 19y ago

Pssh, that's alright, I got in around $7.50 / share back in '03. Also, it's "only" down $16.75 at the close.

henning 19y ago

I wonder if the OP is short AAPL ;)

Xichekolas 19y ago

ZOMG! Apple stock is going in the the wrong direction! The interwebs will crash! Start buying bottled water and stock your bunker! Seriously, who cares. Markets move in more than one direction.

utnick 19y ago

if you bought aapl stock 1 yr ago and sold it today after the crash you would only be up 65% on the year :) i feel bad for you son