I’m not sure whether I’d short it, after all I’m still a fan, but I’d certainly think about closing a long position right after the MacWorld in January. Furthermore I’d keep the position open to January on the assumption that Steve in all his Jobsiness has something big to announce – ie super-portable laptop.
Here’s my rationale for the sudden change of mind:
Apple was and remains a good company, they have executed their business very well and have a superb management team. The iPhone-excitement has carried the stock to new highs, $176, definitely overvalued, and whether this valuation is deserved rest with the company’s ability to sell 10 million iPhones in 2008 as promised.
Everybody knows that tech stocks valuation is based more on magic than solid figures, the market may very well decide to keep pouring money in a company even if it doesn’t reach or beat expectations.
A market capitalization of $153.05 billion is a bit wobbly on Apple and the company is going to have to pull through some spectacular quarters to grow into it.
iPods, laptops, and software can keep the revenue flood up but the market has bet big on the iPhone and now it’s time for Apple to deliver. Worldwide.
The second factor is that I feel a change in the wind. Apple’s strategy with the iPhone started it, subtly, but I think this will go on to turn into an avalanche. Apple has become a monopolist together with the oh-so-hated AT&T. The buzz started slowly, on blogs, message boards. People started jail-breaking Apple’s phone and putting the company in a position it has almost never found itself before – The New Microsoft, and it’s getting to that point perhaps faster than even Google is.
Apple did extremely well with the iPhone in the US and it’s probably going to reach its objectives there. However in Europe and Asia people are used to super-high-tech-gizmo phones coming free if you subscribe a contract for that kind of price (around 30 pound).
Apple’s Achilles’ heel can also be Mac OS X. I know I’m pointing out the obvious here but we all better remember that as Apple’s OS becomes more popular and more corporate customers start adopting it the system will find itself under increasing security threat.
Next thing we know writing viruses and worms for Mac OS X is “in” again.
Let’s face it, Mac OS X is definitely better than Windows, no argument there, but it is also true that it has never faced a real attack.
Perhaps not short, but even El Jobso can’t do much when faced by disgruntled customers and a bunch of panicking bulls.
November 28, 2007 at 9:04 pm |
[...] Original post by The Big Deal [...]
November 28, 2007 at 9:20 pm |
Why short a tough stock like Apple, when you can find a real dog and short the crap out of it. There’s plenty of real crap stocks out there.
Apple’s a sound company. Why woud you want to short a sound company, over-valued or not. To me, that idea defies logic, and carrys way too much risk. If you short it, you might want to buy an above the market call to protect your position.
Find something in the financial sector, like a big mortgage company, and sell away.
Cheers,
Jeff
November 28, 2007 at 9:33 pm |
As I said I’m sure Apple is a sound company, but I’m not sure it will deliver what it has promised for 2008, and the market has bet big on that.
It would be a quick short position before earnings release next quarter if rumors suggest that iPhone sold poorly in Europe and Asia.
November 29, 2007 at 9:14 pm |
But why take the risk on a bet that’s already been made. The six month chart on AAPL is really in an upward trend. It would take bigger balls than I have to short that stock. There’s stocks around that you almost have to short because it’s like shooting ducks in a barrel.
My “Quick short positions” usually turn into nightmares.
November 30, 2007 at 12:58 pm |
The Jan $175 Puts are going for $8.75. They expire in the third week of January. You could be short AAPL for $875 for a month and a half which isn’t a bad price to pay for such a position. Your risk is 100% quantified in this trade. However, AAPL is within striking distance of an all time high. A close above that high would be a really bullish sign, despite what the fundamentals might say.
February 1, 2008 at 2:12 pm |
[...] The last thing I want to talk about is Apple (AAPL). Shares tanked, badly, right after I reopened my position full of confidence with the MacWorld approaching. I should have perhaps heeded my own advice. “Should I short Apple”. [...]
March 1, 2008 at 10:39 am |
[...] love Apple, I love almost all their products (there are few exceptions). Instead of following my own advice and shorting it at the end of 2007 I decided to go long expecting big things to happen at the [...]