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Apple Inc. (AAPL)’s Smartwatch Puts The Company In A Risky Position: Pro

Apple Inc. (NASDAQ:AAPL) had reported a very impressive earnings report three days back, which resulted in Apple Inc. (NASDAQ:AAPL) stock’s upward movement by around 4%. Apple Inc. (NASDAQ:AAPL) stock had touched an intraday high of around $120 on Friday. Many Options on Apple Inc. (NASDAQ:AAPL) stock was hinged on $120 mark. James Ramelli of and Tom Forte of Brean Capital talked on CNBC about their position on the Apple Inc. (NASDAQ:AAPL) stock.

Apple, is AAPL a good stock to buy, Huawei, Xiaomi, high-end,

Ramelli mentioned that he is still continuing to long Apple Inc. (NASDAQ:AAPL) stock after the blowout quarter with record breaking earning numbers. He added that he is continuing to hold onto Apple Inc. (NASDAQ:AAPL) stock via options expiring in March. He feels that Apple Inc. (NASDAQ:AAPL) stock would touch $129 – $130 mark by March.

“I really don’t want to be exposed to the release of the watch, which I think is going to be some time in April. […] This (Apple Watch) could be a huge risk point for Apple. I mean there is a lot that they can do with the cash pile,” Ramelli added.

Ramelli feels that holding onto the Apple Inc. (NASDAQ:AAPL) stock during the launch of Apple Watch might turn out to be very risky as no one is certain about the success of this product. He feels that with huge cash they can do a lot of things like buybacks and dividends to pump up the stock price in short term, but Ramelli thinks that Apple Inc. (NASDAQ:AAPL) needs the Watch to be successful for long term growth. He pointed out that this is the first innovative product under the leadership of Tim Cook as iPhone 6 was just another addition to the product catalog. He added that if Apple Inc. (NASDAQ:AAPL) fail on Apple Inc. (NASDAQ:AAPL), investors might change their tone on the stock.

Forte talked about another aspect of Apple Inc. (NASDAQ:AAPL) which could bring in a lot of money to the company in 2015, which is Apple Pay. He pointed at management’s declaration on earnings call that 2015 is going to be the year of Apple Pay.

“[…] They have done a great job in lining up banks and lining up retailers. But […] you can still use all you favorite credit cards and debit cards for Apple Pay and you can’t go to all you favorite retailers such as Walmart. To that end I think Stacbucks is really the leader in mobile payments. They had 90% shares in 2013,” Forte said.

Forte feels that it is too early for the company to declare 2015 as year of Apple Pay, since mobile payment market is still wide open. He pointed out that Apple Inc. (NASDAQ:AAPL) is a product cycle company and if they target to grow with launch of new products it makes a lot of sense. But, he feels that relying on Apple Pay, when the system is not fully established is not good. He feels that Apple Inc. (NASDAQ:AAPL) is not doing anything to move the needle up in 2015 and he accepts that Smartwatch is too risky.

Disclosure: None

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