Latest Apple stock selloff blamed on misinterpreted story on iPhone sales

Posted:
in AAPL Investors edited January 2014
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.
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Comments

  • Reply 1 of 60


    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.

  • Reply 2 of 60
    quadra 610quadra 610 Posts: 6,741member


    The Reality:


     


    Apple losses = buying opportunity


     


    Microsoft losses = continued slide into irrelevance

  • Reply 3 of 60
    rogifanrogifan Posts: 10,669member
    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?
  • Reply 4 of 60
    jnjnjnjnjnjn Posts: 588member
    But hey, it's a gamblers market, what can you expect.

    J.
  • Reply 5 of 60
    rogifanrogifan Posts: 10,669member
    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?
  • Reply 6 of 60
    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.
  • Reply 7 of 60
    The lumia thing makes me laugh .
  • Reply 8 of 60


    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.

  • Reply 9 of 60


    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.

     

  • Reply 10 of 60


    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".

  • Reply 11 of 60
    jungmarkjungmark Posts: 6,591member
    cough*stock manipulation*cough
  • Reply 12 of 60

    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".  image


     


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

  • Reply 13 of 60
    rogifanrogifan Posts: 10,669member
    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:
  • Reply 14 of 60

    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.

  • Reply 15 of 60


    iCaramba, Apple is doomed.

  • Reply 16 of 60


    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.

  • Reply 17 of 60
    neo42neo42 Posts: 287member

    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.

  • Reply 18 of 60
    Truth be told, AAPL started to slide the moment I bought some shares recently. My bad karma has effected you all. Sorry about that. :)
  • Reply 19 of 60

    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!


  • Reply 20 of 60


    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

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