The market, she’s a fickle mistress. I’ve been holding out for quite some time for a new music player because nothing’s turned my head in the last couple of years but I can tell you unequivocally that I’ll be buying the new iPod without hesitation.
Apparently, Wall Street doesn’t have the same feeling that I do — Apple’s stock has been declining since the minute Steve took the stage. I know, it doesn’t make sense to me either. I’m sure we’ll hear why over the coming days (probably has something to do with all the price cuts) but for now, here’s a pretty graph.
AAPL: 138.10 -6.06 (-4.20%) – Apple Inc. [Yahoo! Finance]
Well I guess, iShares went down in reflection to the price cut of the iPhone. Now Apple will have to sell at least twice as many iPhones to reap in the same amount of profits, no wonder investors aren’t be happy about that.
Having said that, no wonder they are going to more than make up for it through a gentle ‘Touch’.
Of course the share takes a hit after todays announcements. First of all SJ said they are on track towards reaching the goal of selling 1” iPhones by the end of Q3. In applespeak that means sales have been slow. Usually SJ announces numbers that exceed market expectations. The price cut is also seen as a sign of slow sales. Now they have to sell a lot more phones to make the same profit unless the production costs have dropped.
It makes perfect sense. Apple is really, really overvalued by any rational analysis of the financials. Expectations of earnings are extremely high right now, and apparently, even really cool stuff like the new ipods aren’t good enough to get there from here.
That said, I’m getting one of those ipods. I bet they sell a ton.
Apple always climbs on the rumor and drops on the announcement. Go back and look…happens every time. I’ll bet $100 that it is right back up in two weeks. There will be a steady climb to earnings and then another drop. As for being overvalued, you are looking at a company that is sitting on about $13 billion in cash…and is one of the only computer companies experiencing growth. If you ask me they are undervalued. They have brand, great products, growth, profits, and buzz. We’ll likely see another product announcement before Christmas to coincide with the new OS as well. This is a good time to buy AAPL.
As for not selling well on the iPhone…1 million phones is a lot. At an average price of $400 they are looking at almost half a billion in sales of a brand new product. I’m sure they put the 4gb iPhone out there to test the waters and find the sweet spot. Once that happened they dropped it and dropped the price…remember they make money from AT&T as well.
“If you ask me they are undervalued.”
That’s precisely why they’re overvalued. Don’t get me wrong – they’re doing a lot right, and making tons of money. Hell, their stock holders will probably profit significantly even from these elevated levels (the hype machine is really rolling!). But AAPL owners are clearly playing the greater fool game at these prices, and at some point, that game ends. Almost always badly for those who aren’t prepared to bail quickly.
It is a somewhat paradoxical move – though some of the commenters have made some good suggestions on the possible contributing reasons.
You also have to note that news came out late Tuesday night that NBC had reached a deal with Amazon to sell their content online. NBC was Apple’s largest TV media provider on iTunes so that as well is a big blow to their earnings potential. That affects sales of the AppleTV and possibly Airport equipment for those who might have purchased because all of their favorite shows are on NBC. The comment Piyush had that the price cut and slow numbers will also be a speed bump into hitting those earnings. Apple can do everything right, but if they miss earnings estimates even by a penny, the stock will get slammed.