Successor to Steve Uncertainty Hurting AAPL Share Price?


The main downward force on Apple's stock price is a lack of clarity around Steve Jobs' successor and questions about how long he will remain at his current post, according to a pair of articles today examining the performance of Apple's stock over the past few months. AAPL is down more than 2% year-to-date, and is down more than 8% since WWDC began.

Henry Blodget at Business Insider:

In a way, the situation Apple finds itself in is akin to an impending CEO retirement--without a successor having been named. In such "lame duck" periods, companies can become paralyzed, as managers focus more on their own future and political stature and uncertainty and less on the business.

And, in Apple's case, unfortunately, the situation is even worse: No one knows whether Steve will return, or when, or even when the question of his return will finally be put to rest. So the company is in a sort of perpetual purgatory.

Rougemont, a contributor at investor haven Seeking Alpha, agrees, noting "this concern is already discounted in the stock."

There may be another, less Steve-related explanation. Last week, there was some extraordinary downward movement on Thursday, on a day without significant bad news. Philip Elmer-Dewitt at Apple 2.0 took a look at weekly options set to expire on Friday as a possible explanation for the sudden plunge.

Among the dwindling numbers of retail Apple investors, there were the usual cries of market manipulation and calls for reform of the weekly options markets, which some believe have become the tail that wags the underlying stock.

Regardless of the reason behind the drop, some view the price dip as a buying opportunity.

Both Horace Dediu at Asymco and Andy Zaky at Bullish Cross believe this drop is a buying opportunity, with Zaky assigning a "buy" recommendation for any price between $300 and $320, with a $500 price target:

Because of the market's short-term blindness to this obvious reality, we find it prudent to put a strong-buy rating on the stock if it so happens to trade under $300 during a potential brutal summer correction.

Apple just closed at $315, down a point percent and a half on the day.

Top Rated Comments

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119 months ago

Not very good financial advice. Anyone that gambles on uncertainty is heading towards failure.


Gambling on uncertainty is also the way to quick riches.
Score: 9 Votes (Like | Disagree)
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119 months ago

You're looking at this as a consumer and not as an investor. Apple hasn't really done anything lately that gives a long term investor (those are the ones companies really want) a reason to buy and stick around.

You mean other than making billions of dollars in cash and showing spectacular growth? :rolleyes:
Score: 6 Votes (Like | Disagree)
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119 months ago
The entire market has been down since around wwdc. It's not just Apple, and it's likely more related to the global economic slump than to uncertainty over Steve.
Score: 6 Votes (Like | Disagree)
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119 months ago

It's all about Apple running out of steam - fact obvious wherever you look at it...

1. Lion - although I will be sticking with OS X, quite frankly, Microsoft Windows 8 demos made me more excited...

2. iPad - while OKish device it has reached its peak and it is on its way down from now on due to huge number of equally good or better competitors flooding the market.

3. iPhone - see above...

4. Macs - while great machines they are hugely overpriced and might not be as easy sell as they used to be due to horrible economic situation that will only get worse.

5. And finally, yes, Steve is on his way out...

All this = stock going down and it won't stop going down for quite some time!


Almost none of what you just said is true except for that Steve is on his way out. All CEOs have to leave at some point, whether they die or retire. And no, Apple will not have Steve Jobs anymore at some point. But neither will any other company. When he goes, the whole industry loses him, not just Apple. And Apple will most likely get a very good replacement---they are too smart not to.
Score: 6 Votes (Like | Disagree)
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119 months ago
Hmmm...my prediction for Steve's replacement will be...an intelligent, capable, person in their 40's...no, make that 50's. Yes, this will be the chosen one.

Seriously, Steve Jobs is wonderful and his replacement will undoubtedly be a stellar choice. Apple's gonna be fine.
Score: 6 Votes (Like | Disagree)
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119 months ago
Umm... Anyone take economics?

Yeah apples stock is down but look at google and microsoft - they are down too - if you look at the last 6 months apple is down the least out of the three of them. Yeah if you want to only look at the last week sure apple is down more than microsoft but not more than google - this drop has NOTHING to do with steve jobs and everything to do with the US economy being what it is. Not enough jobs are entering the market and investors are getting glum - things arent springing back as fast as everything thought to people are starting to be a little more conservative with their money (as in saving money not the right-wingers).
Score: 5 Votes (Like | Disagree)

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