

Stock briefly dips below $400 USD, analyst predicts earnings miss






Tim Cook
[Image Source: Bloomberg]




Source: Cirrus Logic [press release]

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RE: Poor, poor Tony
By TakinYourPoints on 4/17/2013 5:05:47 PM , Rating: -1
I shouldn't have to preface this by saying that I was short AAPL way back at $650-$700 and made about $15 grand doing so, but considering where I am I clearly have to.

If we're looking at objective measures like sales and revenue then they're higher than ever. Apple's net profit (not gross revenue) is higher than all of Google's gross revenue, which is insane. GOOG, which has been growing at a slower rate, is trading at 2.6x AAPL's price multiple. Even MSFT which hasn't budged in a decade is trading about 1.6x over AAPL. If AAPL stock was priced like GOOG then it would be worth over $1000. As it stands AAPL is trading cheaper than Dell, which tells you how much bad news is being priced into the stock right now.

Apple's profit margins are getting reduced by the more expensive to produce iPhone and iPad, and they will get hammered even more if they release a cheap iPhone to compete in the low end market. Even then their cash on hand and worst case forward revenue growth still makes the stock an insane bargain at this level.

I know people hate talking about price manipulation, but big money moves stocks. When little retail investors jumped into AAPL at $600+ with dreams of $1000 it was time for the big money to sell and take their cash away.

That same big money that sold around the top is buying AAPL cheap right now.

I was short AAPL $600-$700 when people were calling for $1000, but I sure as hell am not short down here when people are crying doom and gloom. I was short QQQ, DIA, and GLD (WOOP!) last week, but doing the same with AAPL carried way too much risk with the move its already taken, not to mention limited downside.

One other thing to note is that all of these smartphone companies share prices are having the same problems AAPL's is. Even Samsung is trading at a price multiple of 10, just a little bit over AAPL's. It doesn't matter that Samsung is making way more money than Google, investors are scared of smartphone companies (Apple, Samsung, Blackberry, Nokia, HTC, etc).

These smartphone companies are cheap, and we all know that market is going to double in the next few years.

Buy low sell high, you know?

Honestly, I think investors are being scared away from smartphones by analysts and big money. Being scared is pointless though, by the time the dust has settled it will be too late to make a good profit.

The only reason I don't tell people to back up the truck is that the overall market has a lot of potential downside in it right now (I think the S&P is going DOWN). Nothing wrong with some nibbling though. :)

RE: Poor, poor Tony
By Mint on 4/17/2013 7:02:02 PM , Rating: 5
Sorry, but I'm calling BS. I had a conversation with you right here on DailyTech about it being the time to short AAPL when it was $650-700. You actively engaged with me and took the opposite stance.

I'm trying to figure out when to short AAPL.

There may be a bump in the stock price after the iPhone5 announcement or after the initial sales spike, but maybe not. One thing's for sure: The Fire HD is going to put negative pressure on Apple's obscene margins. They won't die, but they'll come back down to earth.

I don't know what this has to do with my post. I'm not saying Amazon is going to make a bundle.

I'm saying that AAPL is going to soon find that it can no longer sell iPads at >50% margins, because they don't have any unique technology. The last major fabless tech company to have huge margins, IIRC, was NVidia. Once ATI released the HD 4000 series, NVidia's margins plummeted back down to reasonable levels. That's what's going to happen to Apple in the coming years.

The Fire HD is just one part of it. Clovertrail tablets will unquestionably also put negative price pressure on the iPad within a year, as manufacturers have built <$300 Atom PCs for a couple years (add screen costs, subtract keyboard costs, and it'll be a wash). With phones, Nokia has the best camera (plus WP8 is looking great), Samsung has the best screen plus they're innovating like mad with stylus integration, apps have virtually caught up on Android, etc. Apple will have a hard time selling such high volumes at a premium. They won't die, of course, but their margins are going down.

You said this:



I dunno, you tell me which companies are overpriced here.
When AAPL was mentioned in response to this last quote of yours, you snarkily dismissed it. As for your worries about AMZN, it was 259 then and is 267 as of this writing. And now you continue to predict its demise.


As for me, I'll admit that I didn't make money. With all the $1000 talk, I was waiting for $750 before making my move, and chickened when it fell before I bought my options so I thought I missed my chance :(

RE: Poor, poor Tony


RE: Poor, poor Tony
By TakinYourPoints on 4/22/2013 7:25:08 PM , Rating: 2
Coming back to this late because retro pointed me to it.

I sold against AAPL by selling call option spreads, but I didn't short the stock because trying to call a top or bottom is insanity. Fighting the trend is a losing battle most of the time.

I didn't short AAPL stock but I did short call option spreads that profited when the stock declined, or more importantly the calls didn't expire with any value. Positions like that can profit even if the stock doesn't go down at all, only goes sideways, or even goes up (which it did during my first AAPL position).

Here were my first trades against AAPL. Both were made about 5 weeks before their respective expirations:

Sold August 665/670 call spread for .70, a 16% return in 4 weeks since it expired worthless with the stock at around $650.

Sold September 720/725 call spread for $1, a 20% return in four weeks.

Note that both of those trades against AAPL profited despite the stock going up. This is why I said I had no idea when to short the stock, but I was still able to profit on it stagnating or make an easier profit if it did turn around.

I made two other trades against AAPL on the way down, one in November and another in February, avoiding it in October and January because I generally don't like to trade around earnings. Both were selling call spreads and not shorts on the stock.

And since you brought up AMZN, I traded against it twice, once in September (sold 275/280 spread) and again in January (sold 300/305 spread), both 15% returns.

I also don't dare short actual AMZN stock. The market can stay irrational far longer than one can be solvent, and AMZN with no earnings is one of the most irrational stocks around.

RE: Poor, poor Tony
By semiconshawn on 4/18/2013 8:15:43 AM , Rating: 1
Wow $15K. Gonna retire on that lie?

RE: Poor, poor Tony


You sir are not just full of shit but also poor.

RE: Poor, poor Tony

