The Apple Stock Fear Factor

December 6th, 2012

So once again Apple’s stock price was down in the dumps Wednesday, to the tune of some 6.4%, while the overall stock market price increased. What could possibly have gone wrong? Is it possible Apple’s days in the sun are coming to a close, that people aren’t buying iPhones, iPads and Macs in such great numbers anymore? Are they choosing Windows 8 and the Surface tablet instead? Or perhaps a Nokia Lumia 920, the Windows 8 flagship smartphone?

No, that’s not it. Indeed, it appears that Windows 8 PCs aren’t selling all that well, and you will have to travel a long way to find anyone who owns a Surface RT tablet. So what’s going on here?

I don’t claim to be a stock market expert, or to know much of anything about why prices go up or down in huge spurts other than some evidence of a major change in a company’s prospects. Or the fear of change. You almost think that Wall Street investors might have forgotten to take their antidepressants when they sold off their Apple stock.

At the very least, those who couldn’t afford upwards of $600 per share might get a bargain at the current prices, at least until the street gets a spine, a dose of reality, or some combination of the two.

According to published reports citing industry analyst Gene Munster, of Piper Jaffray, as a source, a big part of the stock’s decline was due to misinterpreting a story about iPhone sales in DigiTimesSeems investors freaked over a story about an expected 20% quarter-to-quarter decline in Apple’s orders for parts in the March quarter. Evidently the investors assumed that meant that sales were expected to decline big time too, but Munster says that figure is nothing unusual for the quarter following the one in which a major product launch occurs. Indeed, expectations are still high for huge iPhone 5 sales next quarter too.

I suppose I could be a little snarky and suggest that some of these investors should maybe take a few pills, and get some reading lessons, so they don’t make serious financial decisions based on flimsy evidence, or no evidence at all. Besides, it’s not as if DigiTimes is considered to be the most reliable source for information about the tech industry.

I think of that unfounded rumor a while back, that Apple had discharged most of the team developing the Logic audio production suite. Within days, the Apple official in charge of that division assured an Apple customer that they are busy working on the next version. Just because something is published about Apple doesn’t mean it’s true. Consider the source of the story, and whether the publication in which it appears has a good track record for publishing accurate information. Would that Wall Street would pay closer attention to such niceties before dumping a company’s stock.

I suppose the fact that Apple’s stock price has fallen by a fair amount in recent weeks may have already made investors more sensitive than usual to perceptions or expectations of bad news. Right now, it does appear that iPhone and iPad sales are excellent, and that the Mac will be roughly even with last year more or less. I suppose the iMac backorder situation isn’t going to help, but it may mean a lot for the March quarter, as shipments begin to catch up with orders.

When it comes to the iPhone 5, production has mostly caught up with demand. You should be able to get the color and configuration you want supporting your favorite wireless carrier almost immediately, or perhaps with a delay of no more than a few days. There’s still a one-week wait for the iPad mini, and that situation may not settle down till the end of the year, which might impact sales to some degree. But that won’t stop you from buying a fourth generation iPad, of course.

With high demand for their products, it hardly makes sense for the stock market to want to dump on Apple. After all, sales prospects appear to be very favorable for 2013, according to industry analysts, and there’s even a report that Apple will control at least 50% of the tablet market through 2016. And you know how Apple is all about exceeding expectations.

Meantime, iTunes 11, a major upgrade, seems to have had a pretty successful debut, though some complain about the lost of cherished features, such as the ability to find duplicate tracks. But it has also been reported that Apple plans to restore that feature and repair others in a bug fix update soon.

When it comes to Maps, I haven’t heard too many complaints lately. Many of more serious bugs that plagued the service in October have been largely eradicated. Sure, it may take months or years of playing catch up with Google before Apple can possibly achieve rough parity. Besides, it doesn’t seem as if Apple’s sales were hurt in any noticeable way because of Mapgate. And maybe Apple learned a lesson not to let something like that happen anytime soon.

As for Wall Street, one hopes that, in a few days, sanity will return. Or maybe not.

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5 Responses to “The Apple Stock Fear Factor”

  1. John says:

    I don’t think it’s any more complicated than this. Many investors have huge gains in AAPL and cap gains taxes are going up. So people are selling in advance of that.

  2. Jim C. says:

    Whenever I see these accelerated sell-offs of Apple stock, I ask the question: What has fundamentally changed with Apple? Almost always, the answer is nothing. If anything, the company is now executing better, as it appears to be moving to twice-a-year upgrades of some of its core products to keep pace with technology improvements. Tim Cook is quoted as saying that whenever he turns on the TV, he feels like he’s going back in time 20 years, i.e., it’s a technology ripe for improvement. If this means that Apple is focusing more intently on TV, I’ll be very interested to see what they come out with.

  3. AdamC says:

    Let do some sums.

    Say I sold Apple at $580 and bought back at $540, I make a profit of $40

    So who are these smart and brave souls making the shorts I just wonder.

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