So last night I get a message from Patrick that starts out:
What The F***! AAAAAAAAAPPPPLLLLLLEEEEEEEE
I'd already been watching it for a couple hours and was pretty disgusted. The conventional wisdom is that the stock hit a new low yesterday on soft sales of the iPad Mini and production slowdowns in the manufacture of iPhones. But at this point iPrettyMuchDon'tGiveAShit. The stock blew through support like it wasn't even there. To me that's a screaming BUY.
My only question is, should I cash advance all my credit cards to buy as much AAPL as I can at $400?
Don't, it's over. Thank me later.
When something blows through support you don't buy...you wait and try not to get killed by the falling knife. I told you about 10x to wait once it broke below 450 because at that point all bets were off. STOP RELOADING.
That is all. Now you can proceed to make fun of me for my Tesla , HLF and FB puts which are currently all in the red (still hope!)
I bought in on the drop at around $460. Getting crushed right now but I simply cannot see how this is not a case of market sentiment. Fundamentally, that company is gold (maybe a poor example this week...?).
Buy a bunch of knives, throw them in the air and catch as much as you can, it will be less painful for your wallet.
Love this imagery.
Nobody knows. It's a gamble - I think if they dont come up with something super innovative (iPhone level) they are done. Expectations are too high after Jobs.
Bought at $200 and got out at $700. Still proud of myself for that.
(Mostly because I'm a relatively horrible personal trader and that is one of my only success stories haha)
Feels like Paulson is long this thing
Bought at 500, bought more at 430. Even without Jobs, this is a solid company filled with smart people that makes popular products. Apple is not HPQ. Or even MSFT.
And Greece is not Argentina! And Ireland is not Greece... And Spain is not Ireland.
And.....
I'm long SAN, so I sure hope Spain isn't Ireland.
But AAPL at current prices just doesn't make sense. I think about AAPL like this: MSFT is 15x trailing earnings, CSCO is at 12x, and and AAPL is 9x. To justify current prices, you need to assume near 0 or declining growth.
While I agree margin pressures may eventually appear, I think AAPL has built a reasonable moat through its "closed garden" development environment. One man does not make a company. 10 years from now? Yeah, they may very well have fall off track. But near term they should still be able to grow.
Why aren't they?
They could be. Almost all tech companies eventually stagnate.
But AAPL's track record is excellent. There was a 3 year gap between the iPhone and iPad - I think we could reasonably expect another major innovation in 2013/14. The bar is just so low for them right now that I think there is a decent margin of safety built in at current prices.
MSFT is a diversified company with enterprise and server businesses that are effective monopolists. Its software underpins the global corporate world and will do so for the foreseeable future.
AAPL makes shiny toys which go in and out of favor frighteningly quickly. Witness: Sony, Palm, Dell, Motorola, Nokia, the artist formerly known as RIMM, Apple circa 1990, etc.
That's not to say I'd be long in either company, but with the former I would probably sleep soundly and not see a 40% drop within a year or see it get displaced by competition in core markets. The tech world changes rapidly, and there's something to be said about a 30+ year old tech company still chugging away.
Obviously this is rhetorical, and am surprised at everyone responding with 'real' suggestions. Buy RI - sorry - BBRY and dont look at it for a year.
Somebody gets it.
Apple is a great company and I like their products, but I think most of the people don't understand Apple. Apple never had a history of appealing to every customer groups, but rather focused their sales on only small number of mania groups. Their wide acceptance from customers is a very recent occurence, and the continuity of this is questionable. Currently, the pendulum is swinging to the possibility that they might not continue this trend.
The only reason i-phone was able to inundate the market initially was because there were no companies who were able to manufacture a qaulity product comparable to i-phones. They had a great year or so, but they started to lose their edge soon after other competitors followed up with them.
And I think if they had some good ideas, they would've put their cash into play already. Currently they have so much in their coffers, and is getting constant pressures from hedgies and others to pay out more dividends and I had a impression that Tim Cook is just trying to buy some time...
Whats your time from? If you cash advance all you CCs I am going to assume you will have to pay it off at a very high interest rate, can you afford to make those payments and not be forced to sell your AAPL holdings? Also, do the math. Try and figure out how much you'll have to payback on the credit cards and then decide if you think APPL can return more than those payments and you should have your answer.
Not sure if trolling...
Somebody doesn't get it.
^has to be in high school...
Funny thing about this thread - I was thinking the same thing yesterday (do 5 shares count as a round lot?). I'm what "smart money" would refer to as "dumb money". Hope that helps.
I've averaged down from about $460 and just bought a leeetle bit more this AM.
I feel filthy. Like an addict.
Every time I see apple fall I think about buying it. Then I go into an aiport and I notice that EVERYONE has an Iphone, Ipad and Macbook. They should probably think about coming up with another paradigm defining product pretty quickly IMO
Don't they have a 25% smartphone market and 5% of the PC market?
Until they seriously invest some of that cash into real R&D, I'm not touching it again. Bought it at $350, got out at $700. Knew that people just were in love with Apple. But once competition provided equal and now better comp, Apple is losing their ground. They put pressure on themselves to produce a game changer every product drop but refuse to spend on the R&D to make it happen still. Apple is no longer dictating to the market. Once they sued Samsung, I knew it was a wrap. Focus went from "beating the competition" to "keep the competition from beating us".
What makes you think Apple can grow, they havent given investors much of a reason to think they can since Jobs died. The innovation went out with him. You'd be better off buying ABX right now
A lot of the comments above are decent. Just apple has lost it's glamour and people are just scared. Too many people own it and now have to sell before their profits evaporate. Company hasn't died, it can get much lower before going higher. So reconsider before you do something like that.
well i'm in on this charade. About to buy some october calls this morning. I have to believe that any weak quarter / weak guidance is priced in, and this quarters earnings will actually help the stock price. After that, Tim Cook will drop his trump card and return some goddamn capital to shareholders. I expect $15-20B in debt taken out to finance a $40B stock buyback and dividend boost - no sense paying unnecessary taxes in a low rate environment. That alone will set a price floor around $480-500. Once that happens, I'm looking for an updated iPad, iPad mini with retina, and cheaper iPhone to stir some much needed excitement around this stock. ' Either that or earnings really shit the bed beyond expectations, Tim Cook returns a laughably low amount of capital, and all the new products look tired and rehashed.
I would sit on that cash and not return it to shareholders because one day they may very well need to start burning that cash to stay alive. Tech changes fast. Talk to Research in Motion about that. All it takes is one competitor to step in, take the torch and poof! Suddenly your burning a couple billion a quarter trying to catch up rather than raking it in. I'm not making a case that Apple is dead or suddenly going to have to do that but all the shareholders I've seen yelling about returning cash to shareholders are those who have been riding the levered long apple train and suddenly their returns are getting pummeled because the vaunted apple didn't hit 1000 a share. I get it, you have the shares and are pissed because they aren't performing and you OWN the company therefore you should be getting capital disbursements.
As a side note, why a cheaper Iphone? Shit, the Iphone 4 is absolutely dirt cheap right now. A cheaper Iphone will only serve to hurt their margins and discourage people in a stagnating economy from buying their flagship new phones. Stay upmarket. Don't diminish your brand with cheap colored neutered clones of your phone. Make people aspire and want an Iphone. Make them salivate at the prospect of saving up or waiting to buy that new one. But that's just my opinion, which probably isn't worth much hahaha.
Apple has more than enough capital to fund Capex, way more. In 2012, their Capex spending was $9.4B, and I guarantee they are researching the iTV, wearable technology like the iWatch, new iPhones, etc.
With that said, what reason do they have to NOT return cash to shareholders? If nothing else, returning capital to shareholders will be a positive signal to investors that apple is a shareholder friendly company. From a value investing perspective, think what the ratios would be if apple bought $40B worth of shares (or 10% of the float at currently market price). If they are smart about returning capital to shareholders, they can easily set a price floor on the stock at $480+.
As for the cheaper iPhone, they have to do it because if they don't, someone else will. Additionally if you look at untapped markets like India where carriers don't subsidize phones, a cheaper iPhone would mean an increase in market penetration. In my view, the cheaper iPhone isn't necessarily a competitor the iPhone, but rather a way to sell iPhone's to emerging market consumers. Apple as a company is one of the best brand managers out there, so I highly doubt they will introduce a product that will dilute their brand image.
Why would AAPL issue debt to finance a stock buyback? I realize that some of their cash & cash equivalents are tied up off-shore, but issuing debt makes zero sense.
I wouldn't say it makes zero sense. Their cost of debt would likely be exceptionally low and undoubtedly cheaper than whatever repatriation taxes they face.
What truly blows my mind is thinking about how much market cap this drop has cost. Mind blowing.
Ps. Went long this afternoon - very nearly went in at 420 but my broker talked me out of it!
Long apple + AU puts FTW
This isn't over, buy AU at 1100, apple at 250
My condolences to anyone with long positions above those numbers
So glad i bought all that Monster for the covered call strategy. Worked perfectly.
That hurts, man. That hurts.
MSFT lost the stigma of being a "game changer" even though it still puts out a lot of great products and generates oodles of cash.... In reality I could see AAPL going the same direction unless they can convince the markets that their future didn't die with Jobs.
In some ways, MSFT is lighting the world on fire behind the scenes. I was actually going to write about that today until AAPL decided to shit the bed.
Agreed- recently MSFT has been rebranding itself amongst recruiting circles as the underdog startup with unlimited resources (which doesn't sound like a bad combo) but the world just focusses on the "follower" stigma they have instead of a lot of the great things they make.
Haters gonna hate
Okay guys. First of all:
I was going to respond to this thread, but glad that Eddie points out it out before I need to . The red flag is using credit card. Never go into debt when trading. You can't effectively with money you can't afford to lose. How can you sit tight with winning position. What happens if you lose? It no brainer, don't trade with what you can't afford to lose. Same goes with investing
Company with no future. Very unfortunate. Google any day instead of Apple.
I maxed out my CCs at the stripper club, but I did hear Cherry say she is long APPL in her daughter's college savings account before they tossed my broke ass out. #SmartMoney
seems like AAPL might have met a support.
Two catalysts: iRadio, Apple TV
I too am thinking jumping in the bandwagon and dropping 5k on call options. What would be the earliest call options expiring? Is buying simple call option the best way to maximize my uptick with minimal down insurance(preferably without margin for I will probably be wiped out before expiration). How can I maximize? I am thinking in the line of of NFLX Q4 earnings call in Jan 25.... https://twitter.com/pdauman/status/294838200923463680/photo/1 Let's hear it fellas.
I'd sell straddles with tomorrow's expiry and buy straddles for next week's expiry. Lower your avg cost for next week and hope they either miss big or talk about what to do with all the cash they have.
this thread reminds of the water cooler discussions when yahoo was losing its Mojo back in the day. I know People who to this day regret buying yahoo as it was falling.
Just stay away from AAPL unless you have strong reason to believe that they are going to come out with a killer product with mass market appeal.
I'm getting crushed by AAPL right now, should have waited longer between bites. Got in a few flips for $$ to help me sleep at night, but this thing is scary. I think the best way to play this thing in the short term is to sell APR 20 weekly straddles and buy APR 26 weekly straddles. I tend to lean towards the long side (not only because I'm incredibly long and taking it on the chin), but this sell off is clearly sentiment and trend based, given the run it made up it's going to have to eat it pretty hard on the way down. There are two potential catalysts in their upcoming earnings: 1) they announce what they're doing with their cash, 2) they miss big time like their suppliers are suggesting and drop 30 handles in a few minutes. Lots of potential vol here that I really don't think is fully priced into the ATM options.
I would just stay out of it. There might be some bids at 350$ level, which will make the price flat for weeks and then the fall continues. Just my 2 cents.
Eddie - just curious, what is your current position in Apple?
Long and wrong.
I think Tim Cook needs to come out with a line of Bananas or Oranges, something to really get the juices flowin'.
bbry with 70% profit
Anyone who compares AAPL to MSFT and CSCO really doesn't understand investing. MSFT and CSCO have been in secular decline since the tech bubble precisely because they traded at ridiculous valuations during their runs. They were massively overvalued in the late 90s and early 2000s. AAPL has rarely traded at more than 15x forward earnings since the iPhone was released. The stock has never been expensive. In fact, it's been quite cheap throughout its run through last fall.
One things that people--especially impatient people in finance--don't realize is that it takes a lot of time/effort to deliver/release products at scale. Product development takes years. 1 or 2 years without a game changing product release shouldn't destroy a company that generates $20 bn in operating cash flow per quarter.
I'm happy about this decline. It will either force Cook to use that massive balance sheet and step up dividends/buybacks significantly or a change in leadership. I don't think AAPL management realizes that it could raise $80 bn in debt and still be fine (that's about 1.3x EBITDA if you think that they can do $60 bn in EBITDA this year). If this company was 100x smaller with the same cash heavy, debt free capital structure, every single LBO firm on earth would be salivating over the prospect of buying it. It's a cash generating machine.
This is a great buying opportunity. The only good arguments I hear from AAPL bears involve sentiment and technicals. The business is fine. Verizon released yesterday and said that the iPhone was 55% of total smartphone units. The iPad is still the premier tablet and the iPad Mini will keep the commodity players from gaining share. The Kindle and Android tablets are all sold at cost. Don't forget, AAPL's market power and balance sheet ensures that they can negotiate with suppliers to make products at the lowest cost in the market. Anyone who wants to compete with AAPL on quality will have to sacrifice margin to do so.
The comparison to MSFT was in that people underestimate MSFT while they DO release good products that just don't get attention (primarily because they spend so much time marketing the bad ones). What I think really matters is that apple get back in the game of rebuilding market sentiment with some new game changing products. These rumors of Apple TV and watches have been around for years now and people are bored with the incremental innovation coming out.
This reminds me of tiger woods- everyone wants him to win but bad press is simply dragging down the consensus. That being said everyone would still buy the shit outta this stock if they win another major (so to speak). I have no desire to catch a falling knife but damn with the yield this looks attractive now...
I was talking about MSFT's decline from high $50s during the tech bubble to its current level. I feel that MSFT's current problem is that they're never first to market with their innovations. All of the innovations in the industry seem to come up from AAPL and GOOG first. Then MSFT tries to catch up--and it usually takes more than 1 try for them to get it right. It just seems to be plodding along with a fast follower strategy. Also, Ballmer just isn't a great CEO, but since he's one of the 20-30 richest people in the world, he's kinda immune from criticism. MSFT's a tough sell as a growth stock. And with the industry shifting to markets where MSFT is weak (tablets and smartphones), it is a tough sell as a solid value play as well.
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