When do you think AAPL will recover? I bought 75 April $800 call options today at $2.95 (lawsuits, investor)

[bmw335xi]

It's quite amazing how much AAPL has been dropping on a daily basis. This stock rarely jumps or declines 3% in a single day. I set aside a small portion of my account for speculative plays, but there is still a lot of time from now until April. However, I'm expecting some bounce maybe to $600 before the fiscal cliff deadline. Either way I think it's a great time to buy shares in AAPL and hold them. I still can't find any store that has iPhone's in stock for AT&T. The iPad mini has been selling well and I like the one I bought. The major concerns going forward are operating margins, supply constraints and the fiscal cliff.

[howard555]

Originally Posted by bmw335xi

It's quite amazing how much AAPL has been dropping on a daily basis. This stock rarely jumps or declines 3% in a single day. I set aside a small portion of my account for speculative plays, but there is still a lot of time from now until April. However, I'm expecting some bounce maybe to $600 before the fiscal cliff deadline. Either way I think it's a great time to buy shares in AAPL and hold them. I still can't find any store that has iPhone's in stock for AT&T. The iPad mini has been selling well and I like the one I bought. The major concerns going forward are operating margins, supply constraints and the fiscal cliff.

I'm hearing these negatives:
1. Apple has missed on the bottom line 3 out of the 4 quarters since Steve Jobs died.
2. What can Apple do to make the iPhone5 better in order to come out with an iPhone6?
A. There should be a limit to how thin it is, how small or large it is, etc.
3. How much smaller can they go with another mini iPad?
4. The price of the mini is too high to compete with Amazon and Google. They can not lower the price or Apple people will buy the mini iPad and not the iPad.
5. What's next as far as innovation = new products?
Jim Cramer spoke to an Apple insider and the conclusion was the only product in the pipeline might be an Apple TV. How many people will want one and be able to afford one? Maybe some sort of iMusic to compete with Pandora.

Cramer was asked what Apple should do, now that he has gone from an Apple bull to an Apple "sell some." His answer was a 10 for 1 split and a blowout quarter and you'd have a $550 stock go to $55 on the split and to $100 on the blowout = $1000.

I own shares and I'm concerned that their ability to innovoate is limited. They can lower prices on their existing products but that reduces margins and earnings and may cause them to be like Microsoft, a dead stock.

I hope it goes to $800 by April.
I am afraid it may not see $700 before or by then.
If they earn $50.00 in the next fiscal year x P/E of 15 = $750.
Any long should buy put protection, if and when it reaches $700-$750-$800.

I agree with Cramer. A stock split would allow more people to be able to afford shares.
Cook seems to be doing things Jobs said he would not do, like an iPad mini, firing top executives, etc. Maybe Cook will do a split to ignite the stock.
From the high it's down 22%, during which the S&P was only down about 5.5%.

[celcius]

Wow, if Cramer thinks a stock split and a great quarter is all it takes for a company to gain $400B in market cap (the size of Exxon Mobil, arguably the most powerful company in the world), I feel for his sorely misguided followers.

[crescent22]

The split argument is lame. Even if there are people who will buy shares at $55, not $550, they don't have much money to affect the stock.

The P/E isn't going to rise from 10 to 15 in the face of slowing growth and lack of wow in the new products. The iPad mini will do well because it's bringing iOS and the apps to a $300-350 price point but that matter is diluted in the impact by the lower margins.

[howard555]

Originally Posted by crescent22

The split argument is lame.

It's not all lame.
-------------------------------------------------------------
Why is Apple’s P/E lower than the S&P while its growth prospects are so much greater?
Here are a couple possible explanations.
1. Institutional investors may be “maxed out” on how much Apple they can own. Institutional investors recognized that Apple was a growth stock at a good price. Yet traditional institutional investors, such as the large money managers like Fidelity, Vanguard, may be able to own just so much of one stock in each fund. So, for example, each fund may be limited by its charter of owing maximum of 3-5% of any one particular stock. Once they “fill their position” in Apple, they can’t buy anymore.
Look at Apple’s top three institutional owners. Fidelity owns $30B in Apple stock (source: Nasdq.com), which represents roughly 5% of Apple’s market capitalization and roughly 5.68% of Fidelity’s assets under management. Similar statistics are true for the second largest owner, Vanguard, who owns $24B of Apple stock. The third largest holder is State Street, which owns $21B of Apple stock and that ownership represents over 3% of its assets under management. It stands to reason that these traditional money managers may be limited from buying any more Apple stock.
What gets more perverse is this: If they are correct in their assessment of Apple and the stock price appreciates relative to other stocks, Apple will become an even bigger percentage of their portfolio (if other stocks in the portfolio do not appreciate in lock-step). At that point, Apple will exceed the limit of any one stock in the portfolio and fund managers may have to pare their position. The irony, thus, is as Apple does better, it could create downward pressure on the stock because fund managers may have to sell to remain within their stock allocation discipline.

2. Hedge funds generally are not subject to these rules, and they tend to have shorter holding periods. But if they recognize the patterns of the institutional investors, they can trade around it and, in effect, keep the stock within a trading pattern. It is plausible that between the traditional institutional funds and the hedge funds, Apple stock keeps getting bought and sold to remain within a range. And, the stock has been prone to being stuck in trading patterns for periods of time. As earnings expand and the price remains stuck in a range, by definition the P/E compresses (P remains constant; E goes up).
By the mid-2000s, most institutional investors understood Apple was a performing investment and most institutional investors who could buy the stock did. Thus, if these investors all have stock allocation rules and are already in, where are new buyers for the stock?
---------------------------------------
Apple recognized this conundrum when it announced a dividend in March 2012. The dividend addressed two concerns:
1. a large cash balance and, potentially,
2. the stock’s trading range.
As a result, funds that were mandated to invest solely in dividend-paying stocks could then invest in Apple. If you look at the Apple stock chart, Apple appeared stuck in a range (of roughly $330-$415) prior to this announcement and has subsequently popped up to a new trading range (of roughly $530-$640) since the announcement. This could be coincidence, or it could be the explanation. Consider this: by opening up the stock to dividend funds, Apple brought in a fresh set of demand. Once that demand was filled, as described in the previous paragraph, the stock gets stuck in a range again. And, as earnings expand but fresh demand for the stock is limited, P is stuck, E goes up, and the P/E multiple, again, compresses.

If these structural constraints are true, Apple could “open up” another investor market. Retail investors like us could buy the stock. Retail investors tend to be longer-term investors, buying and holding a stock, particularly one with which they can identify. But retail investors view Apple’s stock as “expensive” because it carries now a $600+ price tag. Retail investors often get hung up with “expensive” because of the price level, not thinking about valuation. Apple is one of the least expensive stocks on the market in terms of valuation, trading at a discount to the overall market. Consider a stock that costs $600 and delivers $50 earnings per share is no different than owning 10 shares of a $60 stock delivering $5 earnings per share. If this is explained to an experienced retail investor, the response often still is “yes, of course, $600 is too much to pay for a share of stock.” Apple needs to split its stock to bring in retail investors, open up the market for another set of investors to hold the stock and let their biggest fans enjoy the company growth.
Why is Apple's P/E so Low? - Forbes

[crescent22]

You're totally wrong. Apple's institutional stock ownership is 70%; that's no different than the S&P 500 average ownership of 70% cited in this paper:
Trends in Institutional Stock Ownership and Some Implications, Blume & Keim, Wharton School, 2008.

So this idea that Apple's stock price warps its ownership against retail and there is some barrier to to owning Apple stock because of its share price is 100% false. It only harms you if you have less than $500 to invest.

[Peerage]

curious - is it possible to just buy one AAPL stock or a small number of stocks ?

[crescent22]

You can buy a single share of anything.

[gichicago]

Originally Posted by bmw335xi

It's quite amazing how much AAPL has been dropping on a daily basis. This stock rarely jumps or declines 3% in a single day. I set aside a small portion of my account for speculative plays, but there is still a lot of time from now until April. However, I'm expecting some bounce maybe to $600 before the fiscal cliff deadline. Either way I think it's a great time to buy shares in AAPL and hold them. I still can't find any store that has iPhone's in stock for AT&T. The iPad mini has been selling well and I like the one I bought. The major concerns going forward are operating margins, supply constraints and the fiscal cliff.

Fundamentally, i dont see why not. The holidays may produce a good result, and its undervalued by P/E and other metrics, factoring in the expected growth rate next quarter. This article articulates the finer points that im too lazy to type What If Apple Weren't A Tech Stock? - Seeking Alpha

However in the short term, I wouldnt be surprised if 800 is not reached before your April calls expire. I think it will be more market driven, given some of the negative news already discussed here

• Fiscal Cliff - People im sure will still buy the products, but if the market reacts negatively to legislation, then Apple might be part of the fallout
• Margins/Supply Constraints - Possibly. Its reported that Samsung has raised components to Apple 20%. (Samsung hits Apple with 20% price hike: report - MarketWatch) Dont know how that fits into the grand scheme of things, but it could be a catalyst. Additionally, if its decided that Apple searches for another supplier, im not sure how quickly they can ramp up productions
• Innovation - Apple has banked on innovative productions but they stalling a bit, and producing me too items (iPad Mini) and features. Whats next? Yeah, they may have a iPhone 5S now in the works again, but there may be product upgrade fatigue

[LordSquidworth]

Originally Posted by howard555

I'm hearing these negatives:
1. Apple has missed on the bottom line 3 out of the 4 quarters since Steve Jobs died.

They haven't missed in my books. the analysts are the problem.

Originally Posted by howard555

4. The price of the mini is too high to compete with Amazon and Google. They can not lower the price or Apple people will buy the mini iPad and not the iPad.

They're not trying to compete with Amazon or Google. The mini Ipad has been a success, it'll continue to be. Apple is for those who will spend $329 on a mini ipad, not $200. Apple is for someone who spends $1800 on a laptop, not $500.

Originally Posted by howard555

5. What's next as far as innovation = new products?
Jim Cramer spoke to an Apple insider and the conclusion was the only product in the pipeline might be an Apple TV. How many people will want one and be able to afford one? Maybe some sort of iMusic to compete with Pandora.

Rumors are already circulating about Pandora being on it's death bed. We can now access all our music through the cloud on any of our devices.

Looking at their rollout of new products over the last decade, they don't need a product for another 1.5-2 years.

Originally Posted by howard555

Cramer was asked what Apple should do, now that he has gone from an Apple bull to an Apple "sell some." His answer was a 10 for 1 split and a blowout quarter and you'd have a $550 stock go to $55 on the split and to $100 on the blowout = $1000.

I have no use for Cramer. He's an idiot. But that would probably be true. Should it happen? Imo yes. But not to get it to $1000, but to make the stock more stable. One of the reasons it can feel so manipulated is its big price attracts that attention.

Originally Posted by howard555

I own shares and I'm concerned that their ability to innovoate is limited.

You don't have to be concerned. Right now, the whole sector is lacking innovation. It is part of the normal business cycle. Apple had a large lead, so they get lazy. The others catch up, eating into apples territory. As this happens, eventually apply will either pull ahead again, or die. Right now, my bet is pulling ahead. They have quality, and I think they have the greatest products for older people and non-techies.

Originally Posted by howard555

They can lower prices on their existing products but that reduces margins and earnings and may cause them to be like Microsoft, a dead stock.

You don't need to lower prices when you're adding $150,000,000.00 to your profits daily.

Originally Posted by howard555

I hope it goes to $800 by April.
I am afraid it may not see $700 before or by then.
If they earn $50.00 in the next fiscal year x P/E of 15 = $750.
Any long should buy put protection, if and when it reaches $700-$750-$800.

The past few sessions have seemed much calmer then they've been. The fiscal cliff is the current hurdle. Imo, if that wasn't there, appl would be reversing already.

Originally Posted by howard555

I agree with Cramer. A stock split would allow more people to be able to afford shares.

That's not really a reason. Either you buy one share at 500 or ten at 50, its the same thing. Apple should be split for stability.

Originally Posted by howard555

Cook seems to be doing things Jobs said he would not do, like an iPad mini, firing top executives, etc. Maybe Cook will do a split to ignite the stock.

There are different stories there. Some say he wouldn't do the ipad mini, some say he would.

There are also some who say Jobs would already have fired forestall. Jobs was a mountain. He could keep people in line. If forestall wasn't fitting anymore, he wasn't fitting. That innovation you want... best chance of that happening is changing up the teams.

Originally Posted by howard555

From the high it's down 22%, during which the S&P was only down about 5.5%.

Still of the theory that without the fiscal cliff, it'd be going up now.