Report: Drops in Apple’s share price historically followed by surge in earnings growth

Jordan Kahn

In October, Apple stock dropped below 600 for the first time since July. Since then, following a number of new product launches, AAPL has continued to fall and now only sits slightly higher than last week at roughly 550 per share and a market cap of $518 billion. While many have pointed to uncertainty regarding new product launches and executive level changes as the cause of Apple’s falling share price, no one quite has a definitive answer for why AAPL has hit a nearly six-month low. In a report today, titled “A dramatic reading of Apple’s share price”, Asymco analyst Horace Dediu might have the answer.

Dediu studied 13 bear AAPL markets starting with the October 2001 launch of the iPod. As noted in the report, Apple’s stock had just fallen 70 percent year-over-year and continued to drop another 20 percent following the iPod launch. However, since the iPhone launch, Dediu found “every dramatic drop in share price was followed by a surge in earnings growth.” The graph above maps earnings growth following bear Apple markets since the 2007 iPhone introduction.

So, why exactly does this happen? Dediu explained his theory:

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What happened to the AAPL stock price?

Jake Smith

Apple’s stock has been on quite the dip this past month, losing 125 points in 41 days, and falling from a high of over 700 on iPhone 5 launch day. For those who took some analysts’ advice bought at October highs,that’s got to sting. Today, the stock sits at 576, unfathomably low for those left to deal with their stock having lost over $100B in market cap.

But is now the time to buy?

With holiday sales about to kick into full gear with Apple’s new product line, stock may shoot to 1000 sometime in 2013…or it may not.

BullishCross said yes on October 10th, when the share price was just a bit higher than today:

Apple has reached one of those very rare buy points. However, unlike our previous five recommendations, we do not necessarily believe that Apple has bottomed right here at $630 a share. We just believe that Apple won’t see much lower prices from here thereby making this a unique buying opportunity. It’s better to buy at $630 and accept a small potential drawdown than to miss the entire move. We do not believe Apple will see levels below $615 a share. Thus, anything between $615 and $630 is an extraordinary buying opportunity. Between $630 and $650, you have a great entry level.

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AAPL hits all time high, market cap again passes $600B (update closes at: 648)

Seth Weintraub

Some good news for those who did not sell their AAPL shares to buy plummeting Facebook stock:

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Apple passed its all-time high of 644 and its market cap is once again over $600 billion. Apple last hit both milestones on April 10. The news follows yesterday’s first dividend disbursement in 17 years that paid $2.65 per share of the company’s common stock. The stock price closed over 648.

Also today, Jeffries Analyst Peter Misek reported that Apple’s HDTV production was a go with early 2013 set as a target shipping date.

Investors are also looking forward to what appears to be a huge product launch in September which should include a new iPhone, an iPad Mini and other products for the holiday season.

Bullish analysts make the case for AAPL hitting $1 Trillion market cap on $1000+ share price

Seth Weintraub

Fortune relays Piper Jaffray/Gene Munster’s bullish prediction that Apple could reach a $1Trillion valuation in a few years by taking some its competitors’ value while also benefiting from increased tech investment and sales. The first point he illustrates (above) is that during the period where AAPL gained $400B in valuation (2008 to present), some of its key competitors lost the same amount in market cap. The second point is rationalized thusly:

We believe dollars invested in US technology companies will increase ~5% y/y on average for the next three years (CY12-CY14). By comparison, dollars invested in US tech companies were up 9% y/y in 2011. Therefore, the tech sector will add ~$390 billion in market cap through 2014. We assume Apple could capture half of this market cap (from 85% in the 4 years prior).Therefore, the tech sector will add ~$390 billion in market cap through 2014. We assume Apple could capture half of this market cap (from 85% in the 4 years prior).

Here’s a video from CNBC where Munster explains his world view: Apple and Samsung rule the mobile roost and companies like Nokia and RIM disappears into the ether.

Munster’s figures follow another report from yesterday by Topeka’s Brian White who first made the $1000 AAPL call… Read more

iPad 3 press invite and favorable market push AAPL toward half a trillion dollar market cap

9to5 Staff

Update: AAPL closed at 535.41 but is at 536.37 pushing its market cap over $500B

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Some folks noticed that shares of Apple, Inc. surged yesterday morning amid favorable market conditions. Today’s announcement of the March 7 iPad 3 unveiling has managed to push the Cupertino, Calif.-headquartered designer of shiny electronics to a new lifetime high. The Apple stock, which trades on NASDAQ under the AAPL symbol, was up nearly nine points, or more than 1.5-percent, in early afternoon trading.

Valued at $534.08 a share, the company was just shy of $500 billion in market valuation at the time of this writing. Wow, just wow. Talk about the iPad effect.

That is still below Microsoft’s $583 billion valuation from 1999, but the iPhone maker’s getting closer and closer with each passing day. AAPL first crossed the $500 a share milestone the day before Valentine’s Day. Earlier on Feb. 9, 2012, shares of Apple, Inc. passed 10 percent of all of NASDAQ value and traded at $431 a share. In addition, right following Valentine’s Day, Apple first passed the psychological $500 a share barrier. For comparison’s sake, AAPL on Steve Jobs’ Oct. 5, 2011 passing traded at $378.25.

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Apple to blow past HP and become top personal computer vendor on strong holiday sales of Macs, iPhones and iPads

9to5 Staff

Counting tablet PCs as personal computers, Apple is about to overtake Hewlett-Packard and become the world’s top personal computer vendor. All should be known soon when Apple reveals holiday quarter earnings in a conference call with analysts scheduled for Tuesday, Jan. 24.

HP CEO Meg Whitman was first to admit that such a turn of event neither would nor be entirely unsurprising given Apple’s lead in the post-PC world. Whitman said back in November, “It’s possible if you integrate tablets.” Fortune’s Philip Elmer-DeWitt wrote that, based on a poll of 42 analysts, iPad sales could hit the 14 million mark, a notable increase over the 11.12 million iPads sold during the September quarter.

Fortune’s estimates range from 11.7 million (Hendi Susanto of Gabelli & Co) to 19.47 million iPads (Alexis Cabot of the Apple Finance Board). According to research firm Gartner, HP shipped 14.7 million PCs in the last quarter, down 16 percent from a year ago.

Now, Apple in this last quarter cleared 4.89 million Macs, and its holiday sales are estimated to exceed 5 million units. Combined, iPad and Mac will have sold over 20 million units during the holiday quarter, enough to give the Cupertino, Calif.-based technology powerhouse a few million units lead over HP, the world’s leading computer vendor.

Estimated unit sales translate into a 17.6-percent market share for Apple versus 13 percent for HP, representing a landmark achievement by any measure. Again, that’s assuming tablets are counted as personal computers. As noted by Asymco’s Horace Dediu, Apple has never held the top spot. Its Apple II system peaked at 15.8 -percent share in 1984 and the Mac peaked at 12 percent in 1992. Interesting that Lenovo CEO praised Apple last week, saying about Android on tablets that “We still need to learn something, we still need to improve something”.

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