Apple (AAPL) Stock Could Fall Below $200/share

By Feb 7, 2013, 7:52 AM Author's Blog  

For those of you who think Apple (AAPL) technical levels suggest the stock is ‘oversold’ and are considering buying it right now because the ticker won’t stay this low for much longer – think again. According to Vanity Fair contributing editor Bethany McLean, Apple isn’t so much a great bargain as it is a classic value trap.

“I think psychology is a really powerful thing, and it’s human nature to believe that because something was once worth $700 a share, there is a reason it should be there again,” McLean said Wednesday on CNBC’s Fast Money.

McLean, whose March 2001 article in Fortune titled, “Is Enron Overpriced?” was the first to openly question how exactly did the golden child of Wall Street make its money, said there was an argument that Apple’s true earnings power over the last couple of years, which made its stock look so cheap, wasn’t as strong as widely believed, and that “Apple’s true level of earnings is something much lower, making it more expensive stock than it might appear by P/E measure.”

Asked by the hosts what is the right price for Apple at this point, given its potential slowdown and loss of market share, McLean said “I have heard people toss levels around $200, the Apple skeptics out there. Now, the huge amount of cash Apple has provides a floor under the stock and tax-adjusted it’s about $111 a share right now. So you would say it’s hard to believe it is going to go to that level until they show signs of starting to burn through cash, if they do,” she said.

“There’s an argument that technology companies, once innovation dries up, they do start to burn through cash hoard [currently over $137 billion], so you’d have to see signs of that before the stock goes below $200.”

Shares of Apple are down $1.00 or 0.22%, at $456.35 in pre-market trading / 5:09 am EST NASDAQ real-time quotes.

Full McLean clip

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8 Comments

  1. Cliff Thompson says:

    Why do you even bother to print crap like this? This is the dumbest Apple article ever. Does this woman believe Apple is Enron? The company sets record profits every quarter and has a devout following and she thinks it is a $200 stock. What a moron.

  2. John says:

    I stopped reading after the article cited “Vanity Fair” as the source.

  3. D Wise says:

    This reporter just wants to scare people and want them to sell the aapl.

    As long as apple inc keeps piling up tons of cash every quarter and don’t go for foolish acquisitions aapl would do just fine.

  4. Ed says:

    Obvious attempt to scare the sheep into selling their shares to smart firms wanting to buy. Why do they want to buy? They know it’s heading higher. Someone wants your shares.

  5. Kevin says:

    Another complete f’ing moron just trying to get her name out there. And wallstreetpit reporting crap like this just to get ITS name out there. Complete garbage, screw this people.

  6. stormin' norman says:

    From forbes, march 2012:

    Let the countdown begin: Analysts are now saying saying that Apple shares could reach $1,000 within the next two years — up from about $630 today — as it continues to win over mobile buyers with the iPhone and iPad.

    From seeking alpha:

    Credit Suisse First Boston stated, “We humbly submit that over the next two to three years, Cisco could be the first trillion dollar market cap company.” (That was a while ago).

    When stocks are going up, sky’s the limit; when they are going down, 0′s the limit.

  7. Really says:

    $200? really? They just earned $44.15 per share last year, up from $27.68 the year before. Their cash and equiv per share is $41 per share. You guys are going to try and convince people this company should trade at a P/E of 4.5? Uncertain small caps might be justified at that price point, but they have a loyal customer base, diverse income streams, and a brand image that is the envy of the electronics industry. total crap.

  8. Dan says:

    Ditto!
    seriously who is going to take financial advice from a fashion magazine!

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