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Where Is The Panic Bottom in Apple?
January 25, 2013 01:47 PM
I'M AN APPLE BELIEVER
We had interesting developments Wednesday as many key themes may have come to the surface for 2013.
I provided my thoughts on
) ahead of earnings, the keys to the quarter and what I would be looking for on the call.
First and foremost, what does the company intend to do with its stockpile of cash? We did not receive an answer, bad for the stock. Secondly what were the iPhone numbers? Below consensus estimates and the whisper of 50 million.
Additionally we received "realistic guidance" and that left much to be desired. Weak for the stock. Nothing on product cycle refresh, unless you consider colored iPhones as the next big thing. Weak for the stock. I believe
) last hope was to introduce colored laptops. "Dude you're getting a" colored iPhone?
But I digress, as I'm dusting the dandruff off my shoulder and becoming a bit too bearish after a $260 point decline. So what do we do with the stock that is overly loved, overly owned, and the heartbeat of every professional money manager? As the stock trades lower, and it will, we will hear calls for Tim Cook's head! Get him out! He is no Steve Jobs, but then again who is...
Jeff Cooper put forth a valuable piece of content yesterday
when he stated it's not about the valuation. Music to my Minyan ears. I took to the twit Wednesday evening after the ashes had somewhat settled and stated similar sentiment to Mr. Cooper.
Steve Jobs evolved AAPL into a machine that became the heart beat of product innovation. He was a brilliant innovator and an even better operator. Jobs kept Wall St. analysts, dubbed the sharks, at bay and they loved what they couldn't have, control over the company. His quarterly earnings calls were a parade of fear and loathing on a lack of guidance. We all would joke and laugh because he would issue tepid guidance and it warmed our hearts because deep down inside we knew the stock was headed higher. With the dividend, we have rumblings from the value guy rambling about a buy back. It will only get worse. Put the cash to work! What's next? At the moment what we have are question marks left unanswered and the street is scared. What does the street do when they are confused and scared? They sell. They sell with no remorse or thought. They want out. They feel tricked.
So what, AAPL is battling isn't merely a fundamental fumble. It's technical, it's denial, it's panic and it doesn't know where to hide. The breakdown we saw yesterday places the stock in a state of certainty. It's broken. Yes, I realized you just labeled me as Captain Obvious, but if you look at the supply that was eaten up between $550 - $550 over the past two months, that is what you call a false bottom. This is what I know.
It is closer to a buy-the-dip-with-no-regard than it was prior to Wednesday's close
. Sure, you can cherrypick the stock near $440 for an eventual push back to Todd Harrison's level of past support at $485-$500, but it ain't the bottom. Kudos to Mr. Gundlach who said fair value of the stock is somewhere near $425. I believe he is correct as I stated so in my 2013 prediction that AAPL will bottom between $425 and $375.
So if $425 is fair value, where is the panic bottom? The bottom where every "growth" manager and retail investor hits when they are finished selling? That is where we will buy it. I remain a trader of AAPL the stock and a believer in AAPL the company, but wake me when the cash comes to play or a stock split is announced.
The following was posted in real-time earlier today on our Buzz & Banter. To follow the markets all day every day with a
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