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Latest Apple stock selloff blamed on misinterpreted story on iPhone sales

post #1 of 59
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With shares of Apple stock dropping more than 5.5 percent during trading Wednesday, a handful of potential factors have been blamed, including a misinterpreted news story on iPhone sales. But one analyst believes the losses have created another buying opportunity for prospective investors.

While the stock market overall has enjoyed modest gains on Wednesday, AAPL was down more than 5.5 percent at points on Thursday, contributing to a dip in its own index, the NASDAQ.

Gene Munster of Piper Jaffray sees the selloff as a buying opportunity for other investors, with share prices still hovering around the midpoint of AAPL?s 52-week range. And Munster thinks that Wednesday?s decline is due, at least in part, to a misinterpreted DigiTimes story.

"A DigiTimes article from today suggests that iPhone 5 is selling well based on comments from wireless chipset providers and seems to suggest upside to the Street's 43-45 million estimate for December," Munster wrote on Wednesday. "In the same article, DigiTimes is suggesting a 20% q/q decline in Apple's demand for parts and components in March. We believe this 20% decline is to be expected coming off of a launch quarter and do not believe it is an indication of how units might trend in March."

The analyst also noted that earlier news of China Mobile carrying Nokia?s Lumia smartphone may have scared off some shareholders who might think that the iPhone?s presence in China will suffer as a result. Investors area eagerly awaiting an anticipated deal between Apple and China Mobile, which is the largest mobile carrier in the world.

Selloff


"We believe some investors have speculated that China Mobile will carry the Lumia instead of the iPhone," he said. "We do not believe this is true and note that China Mobile already carries multiple smartphones from multiple vendors. We continue to expect China Mobile to add the iPhone in the back half of 2013."

Another factor, according to Munster, is a technical breakdown in shares. Munster believes this issue is already priced in to Apple's stock, but the full effect may not yet have been completely felt.

"Apple's simple 50 day moving average is nearing its 200 day moving average, which is a negative technical sign," Munster wrote. "Based on our conversation with Piper Jaffray Technical Analyst Craig Johnson, we believe that for this technical indication, most of the damage has been done to AAPL, but there could be a worst case additional 10% move to the downside which could be the next meaningful area of support."

Munster also cited the role that margin-type purchases play in the value of Apple stock. Specifically, COR Clearing, a clearing house, has raised its margin requirements on Apple from 30 percent to 60 percent.

"While we don't know what percentage of AAPL shares are on bought on margin, we do not believe the requirement change has anything to do with the fundamental health of AAPL," he said.

Wednesday's selloff comes less than 24 after the news that Apple Senior Vice President of Internet Software and Services Eddy Cue recently cashed in 15,000 shares of company stock for an estimated $8.76 million. Cue and other executives at Apple have sold millions of dollars worth of shares in recent months in anticipation of a capital gains tax increase that will take effect on Jan. 1, 2013.

Despite Wednesday's pullback, Munster maintained his Overweight rating with a price target of $900 per share, and AAPL remains up more than 35 percent on the year.

It's been a rough few months for Apple stock since the company's quarterly earnings report. Shares hit their lowest point of around $525 in mid-November, off 28 percent from their peak in September.
post #2 of 59

Yeah, all these made up stories about Apple have no effect on the stock price¡

 

Breaking: Apple to stop making everything. It's true, because it's written on the Internet buy a person.

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
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Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
Reply
post #3 of 59

The Reality:

 

Apple losses = buying opportunity

 

Microsoft losses = continued slide into irrelevance

post #4 of 59
And people still say Apple's stock isn't manipulated. Most of these guesses are laughable. The stock isn't going to drop 5% because of some analyst note about tablet sales in 2013. I mean this type of research seems to come out every other day, why would it affect Apple stock price today?
post #5 of 59
But hey, it's a gamblers market, what can you expect.

J.
post #6 of 59
Quote:
Originally Posted by Tallest Skil View Post

Yeah, all these made up stories about Apple have no effect on the stock price¡

Breaking: Apple to stop making everything. It's true, because it's written on the Internet buy a person.
So we're supposed to believe Apple's shares are down almost 6% because of a rumor from DigiTimes? Seriously?
post #7 of 59
Actually, the stock low was around $505-510 in November, not $525. When you're biting your fingernails, you tend to remember that sort of thing.
post #8 of 59
The lumia thing makes me laugh .
post #9 of 59

Wow, AI, Does ANYONE here do any research on stories at all?

 

"Apple tumbled more than 6 percent, logging its worst one-day decline in 2012, following news that the company's margin requirements are being raised to 60 percent from 30 percent by COR Clearing."

 

http://www.cnbc.com/id/100279771

 

Problem Solved.

I'm not a pessimist. I'm an optimist, with experience.
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I'm not a pessimist. I'm an optimist, with experience.
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post #10 of 59

This is mostly bunk.  Apple shares are going to be extremely volatile for the rest of December because capital gain tax rates are going up by more than 50% on January 1.

 

That means people sitting on outsize gains--like anyone who bought at under $100 back in 2009--have to sell this year to lock in the low tax rate.

 

Some of them may come back into the market for Apple next year, and will get a higher cost basis as a result.

 

If someone is wondering about my 50% tax hike figure, the current top rate is 15%, next year it goes to 20%. Plus, for those above $250k in income, there's an extra 3.8% capital gains tax for Medicare. So, an increase of 8.8 percentage points is more than 50% of the current 15% top rate.
 

post #11 of 59
Originally Posted by thataveragejoe View Post

http://www.cnbc.com/id/100279771

 

Yep, there sure was a reason to include Apple in the day's overview post other than the word "Apple".

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
Reply

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
Reply
post #12 of 59
cough*stock manipulation*cough
post #13 of 59
Quote:
Originally Posted by thataveragejoe View Post

Wow, AI, Does ANYONE here do any research on stories at all?

 

"Apple tumbled more than 6 percent, logging its worst one-day decline in 2012, following news that the company's margin requirements are being raised to 60 percent from 30 percent by COR Clearing."

 

http://www.cnbc.com/id/100279771

 

Problem Solved.


I'm waiting for the "death cross".  1smoking.gif

 

[oh... the link within the link...  http://www.cnbc.com/id/100281452 ]

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post #14 of 59
Quote:
Originally Posted by Edmund Dantes View Post

This is mostly bunk.  Apple shares are going to be extremely volatile for the rest of December because capital gain tax rates are going up by more than 50% on January 1.

That means people sitting on outsize gains--like anyone who bought at under $100 back in 2009--have to sell this year to lock in the low tax rate.

Some of them may come back into the market for Apple next year, and will get a higher cost basis as a result.

If someone is wondering about my 50% tax hike figure, the current top rate is 15%, next year it goes to 20%. Plus, for those above $250k in income, there's an extra 3.8% capital gains tax for Medicare. So, an increase of 8.8 percentage points is more than 50% of the current 15% top rate.

 
Yeah but that's not as sexy and doesn't create click bait like the other theories do. But it's laughable to think Apple stock would drop 7% on a rumor from DigiTimes or a tablet market share report from IDC. lol.gif
post #15 of 59
Quote:
Originally Posted by Edmund Dantes View Post

This is mostly bunk.  Apple shares are going to be extremely volatile for the rest of December because capital gain tax rates are going up by more than 50% on January 1.

 

That means people sitting on outsize gains--like anyone who bought at under $100 back in 2009--have to sell this year to lock in the low tax rate.

 

Some of them may come back into the market for Apple next year, and will get a higher cost basis as a result.

 

If someone is wondering about my 50% tax hike figure, the current top rate is 15%, next year it goes to 20%. Plus, for those above $250k in income, there's an extra 3.8% capital gains tax for Medicare. So, an increase of 8.8 percentage points is more than 50% of the current 15% top rate.
 

 

Why would people sell and wait to buy in next year rather than sell and immediately buy back the same day to guarantee their cost basis and have very limited risk of loss?  If you need to save some money for taxes then buy back 90%, but I don't understand the logic for selling to capture the gains strictly for tax purposes but not buying back in immediately.

post #16 of 59

iCaramba, Apple is doomed.

post #17 of 59

This sell-off is all about the capital gains tax rate.  Unfortunately, it will continue  till the end of the year (or, although unlikely, until a deal is worked out which leaves rates unchanged for now).  Think of all the new tax money the government will get this year as a result of the "fiscal cliff" scare.  All of those stock holders with large capital gains selling to lock in the 15% rate, and of course, then paying taxes which would not have been paid this year otherwise.  What a windfall for the government.  I wonder how much it will all add up to???....maybe we will have a national surplus when its over.  If I were a conspiracy theorist I would say the fight in Washington is being dragged out to the last day to make sure the government collects more tax dollars this year.  But I don't think that's true, they are too dumb to figure that out.

post #18 of 59
Quote:
Originally Posted by GregInPrague View Post

 

Why would people sell and wait to buy in next year rather than sell and immediately buy back the same day to guarantee their cost basis and have very limited risk of loss?  If you need to save some money for taxes then buy back 90%, but I don't understand the logic for selling to capture the gains strictly for tax purposes but not buying back in immediately.

 

Because it'll likely be less volatile after the new year.  Maybe even cheaper, especially if there are more sell offs through the rest of the year.

post #19 of 59
Truth be told, AAPL started to slide the moment I bought some shares recently. My bad karma has effected you all. Sorry about that. 1smile.gif
post #20 of 59
Quote:
Originally Posted by Rogifan View Post


So we're supposed to believe Apple's shares are down almost 6% because of a rumor from DigiTimes? Seriously?

 

DigiTimes is not credible and neither is Gene Munster. There are some semi-credible theories linking the drop to a change in margin requirements.

 

http://blogs.barrons.com/techtraderdaily/2012/12/05/aapl-off-4-digitimess-ominous-footnote-to-blame/

 

 

 

Quote:
Laurence Balter, principal with Oracle Investment Research, who this morning raised his rating on Apple to Strong Buy, tells me in a brief email communication that, indeed, he believes the swoon this morning is a consequence of greater margin requirements by some firms as a consequence of the rogue trader at Rochdale Securities back in October.

 

 

...but, hey. It's Chinatown!

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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post #21 of 59

I figured it out, if about half of all apple shares were traded at an average profit of $120 each, subject to the 15% capital gains tax, the government would net $7.5 billion in new taxes on apple alone.................There you go

post #22 of 59

its all about the taxes $$$

post #23 of 59

I love how everyone is so carefully not mentioning the elephant in the room.

 

A string of senior Apple execs all selling large percentages of their holdings in Apple stock.  It wouldn't surprise me if that has had an influence on todays slide, which Yahoo is saying has been 6.43%

 

Of course I could be wrong and the real reason is the Gadget show in the UK gave the thumbs down to the iPhone 5 while giving Nokia Lumia 920 and HTC One X+ their vote.
 

post #24 of 59
Originally Posted by cnocbui View Post
I love how everyone is so carefully not mentioning the elephant in the room.

 

They debunked it in the three earlier threads, I think.

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
Reply

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
Reply
post #25 of 59
I could have guessed it was Munster and his kool-aid saying everything will be all right. If there's a used car salesman on Wall Street, it has to be Gene.
post #26 of 59
Quote:
Originally Posted by TheShepherd View Post

I could have guessed it was Munster and his kool-aid saying everything will be all right. If there's a used car salesman on Wall Street, it has to be Gene.
So what exactly is wrong (that Apple can control)?
post #27 of 59
Quote:
Originally Posted by cnocbui View Post

I love how everyone is so carefully not mentioning the elephant in the room.

A string of senior Apple execs all selling large percentages of their holdings in Apple stock.  It wouldn't surprise me if that has had an influence on todays slide, which Yahoo is saying has been 6.43%

Of course I could be wrong and the real reason is the Gadget show in the UK gave the thumbs down to the iPhone 5 while giving Nokia Lumia 920 and HTC One X+ their vote.

 
Two executives is not a string. Besides Bob Mansfield has routinely sold off shares. So I don't think that's an indication of anything. It's probably all related to capital gains taxes anyway.
post #28 of 59
Quote:
Originally Posted by Rogifan View Post


Two executives is not a string. Besides Bob Mansfield has routinely sold off shares. So I don't think that's an indication of anything. It's probably all related to capital gains taxes anyway.


Two?

 

Quote:

Apple’s new Senior Vice President of Hardware Engineering Dan Riccio has sold close to US$11 million worth of Apple shares -

19 November, 2012 by Macworld Australia Staff

Apple exec Bob Mansfield sells off $20.4M worth of company stock
November 29, 2012
 
Apple's 'Mr. Fix-It,' Eddy Cue, Just Sold $8.8 Million Worth Of Shares (AAPL)
December 5, 2012

 


 
post #29 of 59
It never ceases to amaze me how the people in charge in DC think most folks will be stupid enough to sell stock next year instead of this year. I don't have a lot of money but I took some cap gains last month after the election. DC is in for a very rude awakening when the tax revenues they are expecting don't materialize. Just goes to show the common folks really are smarter than the politicians. :-)
post #30 of 59
Quote:
Originally Posted by Tallest Skil View Post

Yeah, all these made up stories about Apple have no effect on the stock price¡

 

Breaking: Apple to stop making everything. It's true, because it's written on the Internet buy a person.

No, but iOS has seen its last major upgrade. In June, Apple will announce a switch to Intel SoCs on all iOS devices; to be followed by a changeover to Android in Sep 13.

 

Cheers

post #31 of 59
Quote:
Originally Posted by GregInPrague View Post

Why would people sell and wait to buy in next year rather than sell and immediately buy back the same day to guarantee their cost basis and have very limited risk of loss?

In the U.S., the tax rules basically require you to wait 30 days if you want the full benefit.
post #32 of 59

Since when is this tax which some here desperately cling to as a reason for the drop specific to Apple? Shouldn't the whole market have fallen the same? The Dow is up 0.64% today and the Nasdaq is down 0.77%. Neither is down 6.43% like Apple. So either this tax applies just to Apple or this explanation for Apple's drop today is silly.

post #33 of 59
Quote:
Originally Posted by galore2112 View Post

Since when is this tax which some here desperately cling to as a reason for the drop specific to Apple? Shouldn't the whole market have fallen the same? The Dow is up 0.64% today and the Nasdaq is down 0.77%. Neither is down 6.43% like Apple. So either this tax applies just to Apple or this explanation for Apple's drop today is silly.


I'll go for Door #2.

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post #34 of 59

to some degree it has happened to other stocks but apple has such a large share price that individual investors do not own enough to trade in volumes large enough to significantly affect the price.  Institutional investors do however, and when they trade in large volumes because of tax implications or portfolio performance metrics it can quickly alter not only the stock price but also perception of the stocks value.

post #35 of 59
Quote:
Originally Posted by TokyoJimu View Post

Quote:
Originally Posted by GregInPrague View Post

Why would people sell and wait to buy in next year rather than sell and immediately buy back the same day to guarantee their cost basis and have very limited risk of loss?

In the U.S., the tax rules basically require you to wait 30 days if you want the full benefit.

For realized losses, not for gains. Presumably the people selling have gains.
post #36 of 59
Quote:
Originally Posted by Rogifan View Post

So we're supposed to believe Apple's shares are down almost 6% because of a rumor from DigiTimes? Seriously?

You obviously have no clue about how Apple stock is continuously manipulated by the hedge funds and other institutional investors. They use every little opportunity to drive big moves in this stock to their advantage, like a yoyo.
post #37 of 59
This statement in the article is total speculation, and total nonsense - "Cue and other executives at Apple have sold millions of dollars worth of shares in recent months in anticipation of a capital gains tax increase that will take effect on Jan. 1, 2013."

Apple execs certainly know that their stock is grossly undervalued right now so why would they be selling shares. The answer is quite clear - to actually cover and pay their huge tax liabilities coming due based on their options vesting. Period.
Edited by FreeRange - 12/5/12 at 5:26pm
post #38 of 59
Quote:
Originally Posted by SlimTrady View Post

to some degree it has happened to other stocks but apple has such a large share price that individual investors do not own enough to trade in volumes large enough to significantly affect the price.  Institutional investors do however, and when they trade in large volumes because of tax implications or portfolio performance metrics it can quickly alter not only the stock price but also perception of the stocks value.

Google's stock price went up even more than Apple's in the past few months. They're also heavily held by institutional investors. Yet Google's stock isn't taking nearly the same hit. (Tho they almost certainly will, perhaps within weeks, due to hanging legal issues.)

 

There's something going on other than cashing in to pay taxes affecting Apple's stock price IMO.


Edited by Gatorguy - 12/5/12 at 5:27pm
melior diabolus quem scies
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melior diabolus quem scies
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post #39 of 59

if you compare apples' chart with googles' over the last 3 years you will see that holders of apple stock are likely to have a much larger profit!

post #40 of 59
Nor does three make a string - This statement in the article is total speculation, and total nonsense - "Cue and other executives at Apple have sold millions of dollars worth of shares in recent months in anticipation of a capital gains tax increase that will take effect on Jan. 1, 2013."

Apple execs certainly know that their stock is grossly undervalued right now so why would they be selling shares. They gave far more upside potential than they do tax liabilities for capital gains. The answer is quite clear - to actually cover and pay their huge tax liabilities coming due based on their options vesting. Period. IRS rules in options tax you when they vest. Executives also can only sell during open windows (specific periods of time) under SEC rules, and not just anytime they want to.
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