Eight Percent Decline in Apple Shares Best Ignored
On Nov. 16, Apple shares hit a 52-week high of $208.70. Two weeks later and they’re trading under $190. That’s an unsettling eight percent decline. But according to Piper Jaffray analyst Gene Munster, it’s no cause for concern.
What we’re seeing is just a seasonal sell-off that’s occurring a bit earlier than usual. Apple’s stock typically outperforms during the last four months of the year and underperforms in the first four months of the year that follows (see tables below; click to enlarge). With Apple (AAPL) a no-show at Macworld this year, that timeline has been accelerated a bit.
“We believe investors are leveraging the late ’09 outperformance and getting ahead of the early ’10 sell-off this year, which may be causing the recent share weakness,” Munster explains. “We note that in the past shares have gone up in anticipation of the Macworld conference; however, this is the first year Apple will not participate in the tradeshow….We remain confident that the Dec. quarter will provide enough upside, driven by Mac, to give investors confidence that the fundamentals are intact.”
That seems a reasonable assessment, particularly given Apple’s reportedly quite strong Black Friday sales. As Thomas Weisel Partners noted a few weeks back, the company’s stores experienced “robust sales driven by sustained brand strength, rising demand for app-ready iPod touches and a positive-mix in Macs.” Presumably, that will continue through the holidays.