BREAKING...Apple's shares to crash 50% in 2012
thestreet.com
Apple Shares Plummet 50% From 2011 Highs
By Robert Holmes
12/21/11 - 06:00 AM EST
Apple shares reached an all-time high of $426.70 within weeks of the consumer technology gadget maker unveiling the new iPhone 4S handset as well as the death of co-founder and former CEO Steve Jobs. Every investor who is bullish on the stock points to how undervalued Apple shares are, with the stock trading at a price-to-earnings multiple that is much lower than the broader market when you exclude Apple's massive cash hoard.
Apple has several positive catalysts on the horizon, with rumors circulating that consumers will see a new iPad 3 tablet, a new iPhone 5 handset, and even an high-definition television released during 2012. Even so, Saxo Bank makes the outrageous prediction that Apple shares will be cut in half from its 2011 high, which means the stock would tumble to $213.35 at some point in 2012.
Saxo Bank's rationale is that Apple's lead in innovation will shrink as competition from rivalsGoogle( GOOG _), Amazon( AMZN _),Microsoft( MSFT _) and Nokia( NOK _) and evenSamsung will cut into profitability.
"Going into 2012, Apple will find itself faced with multiple competitors such as Google, Amazon, Microsoft/Nokia, and Samsung across its most innovative products, the iPhone and iPad," Saxo Bank's strategists write. "Apple will be unable to maintain its market share of 55% (three times as much as Android) and 66% on the iOS and iPad."
As crazy as that prediction sounds, investors should keep in mind that Apple's share price was slashed in half in 2008, as the stock fell from nearly $200 a share to below $100 during the financial crisis. If competition hits a fever pitch as Saxo Bank predicts, Apple's profit margins could be crushed and future profit growth estimates would have to be ratcheted back. |
