Apple Inc. (NASDAQ: AAPL) is trading as though it is a broken stock. Shares are down almost another 2% more as investors are assessing many issues. Locking in gains at 15% after fortunes have been made is only one part here. The new tax regime and its impact on consumer spending will be an issue, even for Apple.
Some of the ongoing caution is also from Jeff Gundlach, who is head of Doubleline Capital, after his bold prediction yesterday on a quick CNBC appearance. His position is one where he is short Apple shares. Gundlach said that downside could be all the way down at $425 because that is the level that the stock just went parabolic from earlier this year. If Gundlach is right then Apple has more than 20% more downside to it. Gundlach accused Apple of no longer releasing new innovative products and he joked that the iPad Mini might just be the prelude to the iPad tutti-fruity with different colors.
Shaw Wu of Stern Agee just this morning maintained his Buy rating and said, “We continue to believe that AAPL is positioned to outperform in this tough macroeconomic environment with its defendable strategic and structural advantages and its vertical integration. Our price target of $840 assumes what we think is a reasonable and conservative 14x multiple on our CY13 EPS plus net cash.”
We just warned yesterday that it would take over $100 billion in investor inflows to get Apple back to its prior high above $700. That is even more now. The drop of over 2% today to $546 is really only the lowest price since late in May. It is also important to realize that even after a drop of more than $150 points that Apple’s stock is still up 36% since the end of 2011.
After Apple broke its 50-day moving average in early October, it hasn’t gone well. It broke its 200-day moving average last week. Those levels as of now are $645.21 on the 50-day moving average and $588.89 on the 200-day moving average, but these will obviously change daily.
JON C. OGG