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Apple stock tanks over 11% in after-hours trading

post #1 of 38
Thread Starter 
Shares of Apple Computer plummeted nearly $6 in after hours trading on Tuesday, losing over 11% of their value despite the company reporting the best quarterly results in its history.

For its fourth fiscal quarter of 2005, the Mac and iPod maker posted revenue of $3.68 billion and a net quarterly profit of $430 million, or $.50 per diluted share. These results compare to revenue of $2.35 billion and a net profit of $106 million, or $.13 per diluted share, in the year-ago quarter.

However, the results still fell short of the extremely high investor expectations that have been baked into the company's stock price, which has recently traded at all-time highs.

As of 5:00pm eastern time, Apple stock was trading at $45.85, down $5.74 or some 11.13%.
post #2 of 38
"One more thing?" Hmmm.. Looks like they timed this perfectly.
post #3 of 38
Buy.
"Many people would sooner die than think; in fact, they do so." - Bertrand Russell
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"Many people would sooner die than think; in fact, they do so." - Bertrand Russell
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post #4 of 38
"It's too valuable, oh no!"
post #5 of 38
Quote:
Originally posted by audiopollution
Buy.

My thoughts exactly, they did beat expectations but just not enough. Just your typical overreaction from analysts. Tomorrows event should be big, which is why it's tomorrow and wasn't at Paris.
post #6 of 38
The market is psycho.
post #7 of 38
The earnings exceeded the expectaions, but the revenues were below what was expected.

My interpretation is that the profit was great, but that the volume of sales was less than anticipated.

ButwhatdoIknow
post #8 of 38
Quote:
Originally posted by AppleInsider
Shares of Apple Computer plummeted nearly $6 in after hours trading on Tuesday, losing over 11% of their value despite the company reporting the best quarterly results in its history.

For its forth fiscal quarter of 2005, the Mac and iPod maker posted revenue of $3.68 billion and a net quarterly profit of $430 million, or $.50 per diluted share. These results compare to revenue of $2.35 billion and a net profit of $106 million, or $.13 per diluted share, in the year-ago quarter.

However, the results still fell short of the extremely high investor expectations that have been baked into the company's stock price, which has recently traded at all-time highs.

As of 5:00pm eastern time, Apple stock was trading at $45.85, down $5.74 or some 11.13%.

I've held Apple stock for just over eight years and this pattern is nothing new. You get a run up before the earnings announcement, Apple meets or beats the projections and the price plummets. Clearly, there are market manipulators that drive this behavior. These are not true Apple investors, these are just greedy bastards that care only about money and not how slimily they make it.

Anyone who has put their money into the stock of Apple Computer, Inc. because they think it is a good investment should be thrilled by the news. Apple is on the right track and our investments in the company continue to be wise.
post #9 of 38
Quote:
Originally posted by Silverlode
The market is psycho.

No, the market has been critical of Apple for a long time (and rightfully so, I might add) for not lowering their margins and using some of those profits to drive revenues.

With $430M coming in for the quarter, to not be advertising the Mac line is troubling. The reason is that anyone who knows anything knows that there's no Mac advertising because Apple doesn't feel that the Mac is a marketable product - there's really nothing sufficiently good they can say about it to drive sales.

So, they sit on their thumbs until the Intel Macs come out when a better opportunity for marketing shows up and stash away the money as fast as they can. But the long-term health of the company ultimately comes down to using your profits for SOMETHING that will benefit the investor. That might be a dividend if you have no other idea what to spend the money on, or acquisitions to expand revenues or secure a market segment, or investing in new product development or just slashing margins to make your prices more appealing to consumers. But sitting on a huge pile of cash when you have no debt is a weak sign to investors.
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post #10 of 38
Quote:
Originally posted by johnsonwax
[BSo, they sit on their thumbs until the Intel Macs come out when a better opportunity for marketing shows up and stash away the money as fast as they can. But the long-term health of the company ultimately comes down to using your profits for SOMETHING that will benefit the investor. That might be a dividend if you have no other idea what to spend the money on, or acquisitions to expand revenues or secure a market segment, or investing in new product development or just slashing margins to make your prices more appealing to consumers. But sitting on a huge pile of cash when you have no debt is a weak sign to investors. [/B]

I expect that we'll hear about a new Apple acquisition in the near future ... and ...

Buy.
"Many people would sooner die than think; in fact, they do so." - Bertrand Russell
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"Many people would sooner die than think; in fact, they do so." - Bertrand Russell
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post #11 of 38
This just pisses me off. I finally have some money to invest so I buy 136 shares
at 51.19. Then the announcement of Apple's best quarter ever which I think
is great news, & now I hear there was a friggin' 11% slide in after-hours
trading! Fate & timing keep screwing with me. When the iMac first came out I
wanted to buy but I was a broke college student. I was going to buy Apple
stock when it was at $14 but then my car up & dies on me. So instead of putting
ten grand in stock I put a downpayment on a car. That ten grand would
be worth something like $100,000+ today. To this day... I curse my old car for
falling apart.

Brock Samson: You didn't tell me Sasquatch was a... a dude.
Steve Summers: What, you couldn't tell?
Brock Samson: Not until I had to...[shudders] shave him.
Steve Summers: What are you, shy?...
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Brock Samson: You didn't tell me Sasquatch was a... a dude.
Steve Summers: What, you couldn't tell?
Brock Samson: Not until I had to...[shudders] shave him.
Steve Summers: What are you, shy?...
Reply
post #12 of 38
Generall drops like this are not reported, as they are fairly common after earning reports. Why would the stock you ask when performance is high? Because, often people are banking on the fact that this high level of success cannot continue. The market "is banking" on the fact that this might be "as good as it gets"

Don't worry.

Quote:
Originally posted by sammick
The earnings exceeded the expectaions, but the revenues were below what was expected.

My interpretation is that the profit was great, but that the volume of sales was less than anticipated.

ButwhatdoIknow
post #13 of 38
I don't mean to be a jerk? But why IN THE HELL would you buy Apple stock? Anybody who spent 2 minutes learning how to invest would know better. Since my brain wants to explode I'll just tell you the stupid version "Buy low, sell high"
not "buy high, and hope for higher" That's what suckers do.



Quote:
Originally posted by mello
This just pisses me off. I finally have some money to invest so I buy 136 shares
at 51.19. Then the announcement of Apple's best quarter ever which I think
is great news, & now I hear there was a friggin' 11% slide in after-hours
trading! Fate & timing keep screwing with me. When the iMac first came out I
wanted to buy but I was a broke college student. I was going to buy Apple
stock when it was at $14 but then my car up & dies on me. So instead of putting
ten grand in stock I put a downpayment on a car. That ten grand would
be worth something like $100,000+ today. To this day... I curse my old car for
falling apart.

post #14 of 38
While I'm concerned about the drop, I too see this as an opportunity for other investors to buy.

I'm not too concerned myself however, as I've already made a handy profit on my shares. I purchased them in '97 at the adjusted rate of $3.75 per share. I guess technically I can't say I've made a profit yet as I haven't sold any shares, but I think I'm doing very well.
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post #15 of 38
I just got this money recently. If I had it earlier, I would have bought earlier.
If Apple's stock price was at 60 or higher, I probably wouldn't have bought it.
I'm in now & it's for the long term so hopefully they'll sell a s**tload of iPods
& Mactels when those come out.
Brock Samson: You didn't tell me Sasquatch was a... a dude.
Steve Summers: What, you couldn't tell?
Brock Samson: Not until I had to...[shudders] shave him.
Steve Summers: What are you, shy?...
Reply
Brock Samson: You didn't tell me Sasquatch was a... a dude.
Steve Summers: What, you couldn't tell?
Brock Samson: Not until I had to...[shudders] shave him.
Steve Summers: What are you, shy?...
Reply
post #16 of 38
Quote:
Originally posted by johnsonwax
or just slashing margins to make your prices more appealing to consumers.

Would it work? I haven't kept track, but last I looked, it seemed that the only two major computer makers making decent profits were Dell and Apple, the rest were in trouble. To make it worth cutting margins, they'd have to have resonable expectation that they can make more back in volume, i.e., to make it worth cutting the margins in half, sales would need to more than double, and I don't think that would happen. If the margin on a computer was 10%, I don't see how dropping a $1000 computer to $950 would double sales.

I do agree that the current Apple line-up really isn't that compelling, and they are taking steps to fix that by getting more suitable chip line, particularly to get away from the shackles of G4 laptops.
post #17 of 38
Quote:
Originally posted by webmail
I don't mean to be a jerk? But why IN THE HELL would you buy Apple stock? Anybody who spent 2 minutes learning how to invest would know better. Since my brain wants to explode I'll just tell you the stupid version "Buy low, sell high"
not "buy high, and hope for higher" That's what suckers do.

Buy low sell high works great for cyclical stocks, but that's not Apple. This is a momentum stock right now. So long as revenues and earnings keep climbing, that P/E will cycle down instead of the share price and *that* becomes a more useful trigger. They have a trailing P/E of 43 and forward P/E of 30, which looks like it'll fall to 28 even without a share price fall. If we fall to $46 as the after-hours suggests, that drops to 25-26 which is pretty good for a growth tech stock.

For a stock that has tripled in the last year, there is no 'low'. You might have a bit of a retracing, but you need to look at other thing to determine if the stock is cheap or not.
The plural of 'anecdote' is not 'data'.
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post #18 of 38
Quote:
Originally posted by JeffDM
Would it work? I haven't kept track, but last I looked, it seemed that the only two major computer makers making decent profits were Dell and Apple, the rest were in trouble. To make it worth cutting margins, they'd have to have resonable expectation that they can make more back in volume, i.e., to make it worth cutting the margins in half, sales would need to more than double, and I don't think that would happen. If the margin on a computer was 10%, I don't see how dropping a $1000 computer to $950 would double sales.

I do agree that the current Apple line-up really isn't that compelling, and they are taking steps to fix that by getting more suitable chip line, particularly to get away from the shackles of G4 laptops.

Well, that's really my point. Cutting margins won't help. Apple knows they won't help. The street knows it won't help. That means that there is something more fundamentally unattractive about the Mac than just the price, and it's something that apparently Apple doesn't belive marketing can overcome.

The real question to ask is, what is so wrong with the Mac that $1.5B per year can't fix? Apple owns the portable music and online music markets, so they pretty much have to invent new customers and let that space mature, but the Mac market is mature. The customers are out there to the tune of 25x-50x what Apple is attracting. Why can't $1.5B get them to show up? The answer is that quarter after quarter Apple has demonstrated through their actions that they're largely unable to turn Mac sales short of selling iPods and waiting. That's their long-term strategy. That sucks. I expect that Intel Macs will change this, but until then...
The plural of 'anecdote' is not 'data'.
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post #19 of 38
In the short term, the stock market is basically gambling. I prefer to invest long-term.

But for short-termers, I suspect tomorrow will go some way towards recovering from the post-results slump that always happens.
post #20 of 38
Quote:
Originally posted by macFanDave
Clearly, there are market manipulators that drive this behavior. These are not true Apple investors, these are just greedy bastards that care only about money and not how slimily they make it.

Well, that pretty much describes the stock market as a whole. Personally I think the opening up of after-hours trading has done more harm than good. Also, with the popularity of online trading came a lot of snap decisions. Things sure have changed over the past decade or so.

     197619842014  

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     197619842014  

     Where were you when the hammer flew?  

 

MacBook Pro Retina, 13", 2.5 GHz, 8 GB RAM, 256 GB SSD

iPhone 5s • iPad mini Retina • Chromebook Pixel • Nexus 7

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post #21 of 38
Quote:
Originally posted by nagromme
In the short term, the stock market is basically gambling. I prefer to invest long-term.

But for short-termers, I suspect tomorrow will go some way towards recovering from the post-results slump that always happens.

It would have been nice if I had purchased that stock tomorrow morning
instead of today.

\
Brock Samson: You didn't tell me Sasquatch was a... a dude.
Steve Summers: What, you couldn't tell?
Brock Samson: Not until I had to...[shudders] shave him.
Steve Summers: What are you, shy?...
Reply
Brock Samson: You didn't tell me Sasquatch was a... a dude.
Steve Summers: What, you couldn't tell?
Brock Samson: Not until I had to...[shudders] shave him.
Steve Summers: What are you, shy?...
Reply
post #22 of 38
Quote:
Originally posted by mello
It would have been nice if I had purchased that stock tomorrow morning
instead of today.

You know, that's true 50% of the time...

But a word of advice - NEVER buy right before earnings or a major announcement. It'll kick your ass almost every time. A few weeks ahead is usually okay, or right after depending on the snap decisions by the market, but never the day before. All the optimists have driven the stock too high and all the pessimists will bail the day after and kill you. Only when the news is good enough to turn pessimists into optimists do things turn out okay.

Apple is a particularly touchy stock. They're still the 4 year old kid in the lion cage. Doesn't matter how smart or well-equipped the kid is or how toothless that lion looks, you still expect the kid to become lunch - so every little movement on either side makes the markets pulse quicken. Holding Apple for less than 6 months is really asking to lose money, IMO.
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post #23 of 38
Quote:
Originally posted by webmail
I don't mean to be a jerk? But why IN THE HELL would you buy Apple stock? Anybody who spent 2 minutes learning how to invest would know better. Since my brain wants to explode I'll just tell you the stupid version "Buy low, sell high"
not "buy high, and hope for higher" That's what suckers do.

Another phrase common in trading circles to go with that one is: Buy on the hype, sell on the news.

Two points to note regarding this reported fall.

Firstly, even fairly small volumes done in after hours trading can skew the price, especially if there are few market makers quoting. Chances are that one of the large funds unloaded some Apple stock and moved the price quoted by whoever was landed with it. In which case they needed to offload it pronto and hence slashed their price. Tomorrow will give a more accurate reflection of the true reaction to the news.

Secondly, it's easy to say: buy low and sell high. In practice it is somewhat more difficult especially as every event related to a company is likely to affect it's future earnings and hence value. For all you know tomorrow's announcement may bring some wonder device that doubles Apple's earning potential. In which case yesterday's price may seem very low in comparison.

webmail, I expect you're still waiting for the price to drop back to $6. Well I wouldn't hold your breath.
post #24 of 38
i'd go in now if i can get $46 and then sell when it hits $60 at the end of january, selling it pre-macworldsf2006 maybe... hmm... now to convince my dad.
post #25 of 38
for us stock noobs what really does after-hours trading mean?
how long does it last? how much can they trade?

according to marketwatch.com AAPL after hours is $46.18 with a volume traded that is more than 1/4 of the volume traded during regular hours.
post #26 of 38
It was at $46 a month ago, what's the issue folks? It will crawl back up.

When a video iPod isn't released tomorrow I expect it will fall a bit more.

You have to remember the stock price isn't decided by what happened today, or yesterday, or what will happen tomorrow - the $56 that the stock was trading at a few days ago already included the 'much better than expected' performance this quarter, but Apple only delivered 'better than expected' performance, so it goes.
post #27 of 38
So, we're back at August levels... not all THAT bad. Really sucks to lose 10% (on top of the past week), but it gives you an idea of how quick AAPL has been moving up in the past month. It'll probably recover some tomorrow, and three months from now this will just be a bump on the road.
Guess the iPod lineup had stagnated a bit over the past 6+ months (I know I've personally been waiting for that 80GB update), I think that was the biggest factor to less-than-stellar sales, people have been "holding out". That seems to be a problem for Apple, people want the latest and the greatest, and they're willing to wait (a bit). That said, I think the nano, along with a refresh of the HD based iPods AND whatever tomorrow ushers in, will put AAPL in a great position for Q1. Mac sales might be a little soft next Q, as once again, people will be holding out for the Mactel updates, but switchers should help it balance out.
Apple's looking good... sequential growth that any company on the street would give a left nut for.

-To infinity and beyond

(edit) looks like TS just jumped on the iPod video rumor... who's knows we could be back at $52 by tomorrow's close
To infinity and beyond!
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To infinity and beyond!
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post #28 of 38
have you guys looked at the price to earnings ratio when it was around $55. it was pretty damn high. and the volumes traded in the past two weeks show a lot of speculation. \
post #29 of 38
Quote:
Originally posted by sunilraman
have you guys looked at the price to earnings ratio when it was around $55. it was pretty damn high. and the volumes traded in the past two weeks show a lot of speculation. \

Well, forward PE is still 30, which isn't too bad since earnings numbers have consistently cranked higher.

There's clearly more trading of AAPL than we used to see. Also, notice the large 100K-200K buys almost every morning opening the stock $.50 higher than the previous close. Some folks are buying in for the long haul. My hope is that they're not phased by todays numbers and keep pushing in over the next week.
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post #30 of 38
Quote:
Originally posted by sunilraman
for us stock noobs what really does after-hours trading mean?
how long does it last? how much can they trade?

according to marketwatch.com AAPL after hours is $46.18 with a volume traded that is more than 1/4 of the volume traded during regular hours.

Pre-market: 8:00am to 9:30am EST
Regular session: 9:30 am to 4:00 pm EST
Extended session: 4:00pm to 5:30pm (ECNs) EST

As for your question of "how much can they trade?" - as much as the traders want, though pre-market and after-hours trading sessions are far less liquid (and hence more volatile) than regular session trading.
post #31 of 38
Quote:
Originally posted by mello
This just pisses me off. I finally have some money to invest so I buy 136 shares
at 51.19. Then the announcement of Apple's best quarter ever which I think
is great news, & now I hear there was a friggin' 11% slide in after-hours
trading! Fate & timing keep screwing with me. When the iMac first came out I
wanted to buy but I was a broke college student. I was going to buy Apple
stock when it was at $14 but then my car up & dies on me. So instead of putting
ten grand in stock I put a downpayment on a car. That ten grand would
be worth something like $100,000+ today. To this day... I curse my old car for
falling apart.


I hear you, but there are two techniques you could consider, one risky, one not so much.

For the less risky investment, use an opportunity such as this to "average down" on the stock. Never put all your money in a stock without some reserves to do this. Averaging down means buying more shares when the price goes down, so your overall target price for profit is lower. For example, if you bought 136 more shares now at, say, 47.00, then Apple stock would only have to return to 49.10 before you're even again (minus commissions, of course).

The riskier method but also the potentially more rewarding, is to trade Apple options instead. Explaining the options market is too much to go into here, but you could buy puts (a bet the stock will go down) and calls (a bet the stock will go up) at the same strike price, let's say 50 in this example, and hope that Apple stock moves enough in one direction or the other to cancel out the put or the call option that decreases in price. I won't know until the market opens tomorrow, but the 50 call will probably drop from 3.00 (cost $300 per call option) to under 1.00 (let's say to .50, call it a loss of $250). However, the 50 put option will likely increase from 1.45 (cost $145 per put) to well over 4.00 if Apple stock opens at $47 or lower. That's a profit of over $350 on the put, possibly even more if the stock trades lower. I'm just guessing here, but it illustrates the point. The more puts and calls you buy, the more money you can make (and lose). That's a very quick and dirty explanation, but hopefully it illustrates one way to beat a stock plunge on an earnings report, as well as profit from it if it goes up. This technique would have worked well after the April earnings report too when the stock tanked.

Now, before anyone gets into the options market I recommend highly that they read up about how to use them and what the risks are. You can lose all your money quickly. If you get into it without doing your due diligence first, then I can only say "a fool and his money are soon parted."
post #32 of 38
Quote:
Originally posted by webmail
I don't mean to be a jerk? But why IN THE HELL would you buy Apple stock? Anybody who spent 2 minutes learning how to invest would know better. Since my brain wants to explode I'll just tell you the stupid version "Buy low, sell high"
not "buy high, and hope for higher" That's what suckers do.

was going to say that myself but you got there already.
post #33 of 38
Well, better buy low.

And Apple fans are a bunch of suckers. Or at least for their company's stock.
post #34 of 38
F_ckit balls to the wind I'm short selling. Down, go down, down, down......
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When I looked up "Ninjas" in Thesaurus.com, it said "Ninja's can't be found" Well played Ninjas, well played.
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post #35 of 38
my guess is that this stock drop has something to do with the news of Real and Microsoft settling their anti-trust lawsuit, which seems to be directly aimed at Apple, iPod, and iTunes. Microsoft will now be pushing Real Rhapsody music downloading service along with adding Real Player to all XBox's. Everyone wants to de-throne Apple in the MP3 wars, and it looks like it will take at a minimum, a "Dream Team" of companies to even attempt it. Its unfortunate, but with all these companies coming together to fight Apple and iTunes, they just might win in the long run. How can Apple defend against all these attacks from all sides? the music labels, sony, microsoft, Real, etc. etc.
post #36 of 38
Quote:
Originally posted by Relic
F_ckit balls to the wind I'm short selling. Down, go down, down, down......

Clearly a dumb move.
post #37 of 38
heh. i've learnt never to take Relic seriously, he's a real smartass
post #38 of 38
Quote:
Originally posted by Spork Heidelberg


The riskier method but also the potentially more rewarding, is to trade Apple options instead. Explaining the options market is too much to go into here, but you could buy puts (a bet the stock will go down) and calls (a bet the stock will go up) at the same strike price, let's say 50 in this example, and hope that Apple stock moves enough in one direction or the other to cancel out the put or the call option that decreases in price. I won't know until the market opens tomorrow, but the 50 call will probably drop from 3.00 (cost $300 per call option) to under 1.00 (let's say to .50, call it a loss of $250). However, the 50 put option will likely increase from 1.45 (cost $145 per put) to well over 4.00 if Apple stock opens at $47 or lower. That's a profit of over $350 on the put, possibly even more if the stock trades lower. I'm just guessing here, but it illustrates the point. The more puts and calls you buy, the more money you can make (and lose). That's a very quick and dirty explanation, but hopefully it illustrates one way to beat a stock plunge on an earnings report, as well as profit from it if it goes up. This technique would have worked well after the April earnings report too when the stock tanked.


In other words, a straddle.
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