Apple Inc. (AAPL): The Biggest Risk On Its Journey To $500

Having bounced nicely off their recent low below $400 per share, Apple Inc. (NASDAQ:AAPL) shares have been heading higher ever since. The question that investors now want answered is whether the stock can reach $500 and beyond anytime soon. While competition for the iPhone from Google Inc (NASDAQ:GOOG) Android devices and for the iPad from Microsoft Corporation (NASDAQ:MSFT), particularly given the recent news that Microsoft Corporation (NASDAQ:MSFT) may be acquiring Nook Media from Barnes & Noble, Inc. (NYSE:BKS), are factors, the single biggest threat to Apple Inc. (NASDAQ:AAPL)’s race to $500 is the broader market. If the market can avoid a correction, Apple Inc. (NASDAQ:AAPL) has a chance. If not, it’s likely to put the next century mark on hold for at least a few months.

Apple Inc. (AAPL)Short-term headwinds
In the immediate term, Apple Inc. (NASDAQ:AAPL) is facing some real challenges that are primarily a product of timing. In the last earnings call, CEO Tim Cook alluded to several new products that will come out of Cupertino “this fall and beyond.” In the interim, Samsung is expected to roll out several new versions of the Galaxy S4 and launch its own operating system later this summer. You should also expect to see new smartphone offerings from Nokia Corporation (ADR) (NYSE:NOK), which recently made clear that it’s sticking with Windows as long as CEO Stephen Elop is at the helm. Finally, with BlackBerry bringing the Q10 to market, Apple Inc. (NASDAQ:AAPL) is waiting on the sidelines while all of its competitors push ahead. The slow product cycle is one of the chief complaints some have with the iPhone maker.

Hopes are waning that Apple Inc. (NASDAQ:AAPL) might accelerate its product cycle to match its competitors, as mounting evidence comes in that fall really does mean fall, and Android, Windows, and BlackBerry are likely to get the summer to themselves. Apple supplier Pegatron is rumored to be building its labor force but up to 40%, but slowly over the next several months. In addition, LCD-maker Sharp is said to have plans to ramp up production, but not until June. What all of this suggests is that a surprise early release is highly unlikely.

The biggest risk to $500
As anyone who follows the economy knows, the stock market has been on a tear of late, hitting progressively new highs. While the earnings news for the quarter has been solid, the run-up in the equity markets has been largely attributed to the continuing action of the Federal Reserve. There is a great concern that when the Fed removes its support from the financial markets, the house of cards that has been created may tumble, taking the major indexes with it.

Leaving such a severe outcome aside, the stock market is due for a healthy correction if it’s going to keep running higher. When that happens, it’s unlikely that Apple will be able to remain completely unaffected; you should expect to see shares trade lower as a result of any real correction. If the market doesn’t correct, or if it can do so in an unusually orderly manner, Apple should be able to reach $500. If a decline occurs, don’t expect to see a five-handle on the stock for several months.

The article Will Apple Make It to $500? originally appeared on

Fool contributor Doug Ehrman has no position in any stocks mentioned. The Motley Fool recommends Apple and Google and owns shares of Apple, Google, and Microsoft.

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