Double header: Twice the Apple doom
Apple is doomed and nothing can save it! At least that’s what it would appear that USA Today’s Matt Krantz is telling us. So when the Macalope says “double header” he means that’s the number of times he’s had to slam his head against his desk.
Oh. Oh, dear. Well, maybe the Watch…
OMG HOW DID HE DO THAT?
Well, magic is easy when you have one answer for everything: Apple is doomed and there’s nothing the company can do about it.
But what is it, exactly, from which the company needs to be saved? Angry hornets? Killer shrews? Were-beavers?
Oh, God, let it be shark squirrels!
Apple (AAPL) did it! It sold 13 million new iPhones in the first weekend - beating expectations and sales numbers from the launch of the last version of the phone.
But that was like almost a week ago. What have you done for us lately, Apple?
But even these numbers aren't enough to impress investors.
Ohhh, you’re not talking about Apple. You’re talking about AAPL. The Macalope wonders if that financial industry press tic of putting the stock in parentheses after the name of the company has confused the issue. The two are not the same thing, however.
It is true that Apple’s stock is down from its high (kind of what makes it the “high”). It’s down because the market is down and because, while it beat last year’s iPhone opening weekend sales figures, it did so in part by shipping to more countries right out of the gate (all of which Krantz notes). So it’s still unclear whether the iPhone 6s is definitively a better seller than the iPhone 6 or at least by how much.
Investors apparently expect Apple to come up with something that’s going to match the iPhone sales growth it generated since 2007. That’s going to be a little difficult since the smartphone market has pretty much been the big thing over the last 10 years. It might take a little time. Maybe they can never do it. But if you want to invest in the tech sector, they still have a better business than most.
Shares of the formerly can-do-no-wrong stock…
A title AAPL held for a few years while it was Wall Street’s darling before investors, cartoon-character like, were hit on the head again and went back to their usual pattern of misunderstanding the company.
…are down 19.6% from their high - putting them just outside the claws of a bear market. That's much worse than the 10.7% decline of the broad Standard & Poor's 500 from its high.
There are a million ways to slice this market data and the best way is the way that makes AAPL look the worst.
Yes, AAPL is currently about flat from where it was 10 months ago. The Dow is about flat on a year and a half and the S&P 500 about the same. Judging a stock based on its high water mark is the height of short-term investment thinking. “Irrational exuberance made the stock go up to this point. Why can’t we be irrationally exuberant about it all the time?”
The Macalope doesn’t play the ponies anymore and he’s certainly not here to tell you that you should invest in AAPL. But he will say that judging a stock based solely on where it is right now relative to its high is not a great investment strategy.