Apple is off 10% this morning after disappointing quarterly earnings and revenue guidance (so the “experts” say). Personally, I didn’t think the quarter was that bad. It appears that the fundamentals have been thrown out the window at this point and the stock is getting hammered until all weak-handed investors cough up their shares. Here are my thoughts:
- Too many people were still bullish in the low 500’s, trying to call the bottom, which means we might be close to finding a bottom now as I’m sure today has frustrated a lot of people into bailing on the stock. It could take some time, but once there are no more sellers it should start climbing again.
- The valuations are becoming ridiculously appealing at this price. The market is treating the stock like the company will be losing money hand over fist like a dying company, which I just don’t see.
- Apple committed to return $45 billion (about 10% of market cap) to shareholders over the next 3 years. Considering it’s down 10% from yesterdays close, if you want to make a 3 year investment, in a way you can buy shares at a 20% discount to yesterday’s market value.
- A few analysts just cut their price target for the stock. Analysts almost always make the wrong action at the wrong time – they raise their target near the top, after the stock has been on a tear, and they downgrade/lower their price targets after a stock drops 20% to 30%.
- The last explosive move began last January around 425/430. At times, stocks will retrace a move to test everyone that has bought during the climb, to see if they’ll cough up their shares once their gain disappears.
I just don’t see a dying company yet…
Nick