Apple is Down in the Dumps
Apple (NASDAQ:AAPL) crossed the dreaded “death cross” during trading on Friday as the stock fell enough for its 50-day simple moving average to fall below its 200-day moving average. The stock closed down 2.60 percent at $532.99, slipping as much as 8.8 percent for the week.
What Ails Apple?
Apple’s stock is now off more than 24 percent since closing at a record high of $702.10 back in September and has traded lower nine out of the past 11 weeks, according to CNBC. That has led to approximately $150 billion in market capitalization to be wiped out, with high-than-usual trading volumes implying investors’ keenness to bail out.
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Apple has weakened on worries about the sustenance of its high profit margins and concerns that rivals are turning increasingly competitive. In addition, fiscal cliff-related worries are forcing investors to indulge in panic selling before the scheduled higher investment and dividend taxes start taking effect in the coming year.
ACI Research’s Edward Zabitsky, who has an extremely rare short sell rating on Apple shares, has said that the company’s lack of innovation in the post-Steve Jobs era and the falling appeal of the App Store experience were hurting it hard. “In the longer term, Apple’s app-store model is breaking down,” Zabitsky, who has been arguing that the company is headed to $270 per share, told Bloomberg.
CHEAT SHEET Analysis: Catalysts for a Stocks’ Movement
One of the core components of our CHEAT SHEET investing framework focuses on the possible forces affecting the stock’s movement. While the technical marker usually signals additional declines because of changes in investors’ perceptions about it, Birinyi Associates analyst Collin Monsarrat said earlier in the week that this may only signal a short-term bottom for Apple. Monsarrat said Apple’s stock had the tendency to recover after similar bad phases.
Agreeing with Monsarrat was Eric Jackson, managing member of Ironfire Capital, a hedge fund that is long Apple. With iPhones currently accounting for just 15 percent of all mobile phones globally, the company’s market share could soon double. Add an Apple TV and an electronics payments system to the mix, and Apple could triple its earnings and stock price by 2016, Jackson told Bloomberg.
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