Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Ignore The Hype: Here is Why Apple Inc. (AAPL) Lost 14% in Two Weeks

Page 1 of 2

Following the announcement of Apple Inc. (NASDAQ:AAPL)‘s financial results for the third quarter of fiscal 2015, which disappointed the market, I had a short interview on CNBC Asia, where I presented my bearish case on the company. Most likely, they invited me because they couldn’t find any well-known Apple bears to appear on the show. Meanwhile, Apple’s stock lost 14% over the last couple of weeks as investors started to realize that Apple is really a single product company that will be facing increasing competition from low cost smartphone manufacturers.

Most Fragile Smartphones That Definitely Need Protection

The decline started when Apple Inc. (NASDAQ:AAPL) disclosed that it failed to sell 50 million iPhones and generate $50 billion in revenues in its quarterly results. As always Wall Street analysts had been “expecting” lower earnings and sales figures and Apple beat these expectations comfortably, but the stock’s decline is telling a different story.

Apple Inc. (NASDAQ:AAPL)’s sales in the Greater China region declined 21% sequentially, which was in line with the decline in sales in Japan and the rest of the Asia Pacific region. This told us that Apple’s China sales stopped accelerating, yet the media and Wall Street focused on the 100% year-over-year increase in Chinese sales and failed to recognize what was happening at the margin.

Well, this week we found out that Apple wasn’t the market leader in China’s smartphone market, according to a report from Canalys. It ranked third, behind two low cost Chinese rivals each of which captured nearly 16% of the market. More specifically, Apple was outrun by Xiaomi and Huawei, which gained 15.9% and 15.7% of the market share.

Apple Inc. (NASDAQ:AAPL)’s quarterly earnings report revealed that Apple Watch sales also failed to beat consensus expectations of 3.4 million units. Some analysts were projecting as many as 5 million units. Apple probably sold about 2 million units which is barely enough to make up for the loss in iPad sales. Some reports from this week also suggested that one of the suppliers of chips and sensors for Apple Watch did not reach its breakeven point of 2.0 million units.

Morgan Stanley analyst Katy Huberty who had a $155 price target for Apple Inc. (NASDAQ:AAPL) before the recent declines sent a note this week and said the following: “We acknowledge that with Apple building iPhone component inventory, […] While these headlines may weigh on the stock near-term, we are buyers on any related weakness as we see an upward bias to our iPhone unit and gross margin assumptions”. Morgan Stanley reiterated its ‘Buy’ rating and the $155 price target. Surprisingly or not, several other analysts also reiterated their bullish outlook and high price targets on Apple, including FBR & Co., JPMorgan Chase & Co., RBC Capital, with FBR having set the highest price target of $175 per share. The only analyst that downgraded the stock following the results is Bank of America, which cut the rating to ‘Neutral’ but maintained a price target of $130.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!