<<Common sense tells us that if Apple beats consensus estimates, it will do well for the stock. Or I should say, if it beats the "whisper" number. I've wondered where the whisper numbers are published, if anywhere, as I've seen stocks that beat consensus but only met the whisper usually fail to respond positively, post announcement.>>
I'm getting pretty worried about how the stock will respond to earnings reports... the market acts really odd lately, in my opinion. Some stocks follow common sense: Intel delivers a nasty surprise and falls 15%, Microsoft delivers a nice one and the stock rises 15%. But what's up with Adobe, or Bay, or a number of others? Despite a serious warning by Bay, the stock price dipped a little, then went higher. If you discount the run-up in ADBE's price in the hours before their disappointing earnings report, the price is higher on this news. The rationale passed around is that "the news was already factored into the price," a claim I just can't buy. This may have been true of ORCL's recent failure to respond much to a positive earnings report, since the CEO and CFO had been chatting it up for a month prior, but no one expected Adobe to report bad news.
Moreover, very few stocks seem to be moving much higher on good news these days. So how can we expect AAPL to move up on the 15th if the news is good? Does anything distinguish AAPL from the rest? Many people have argued that since it is under-priced and people are looking for places to put their money, that'll provide some fuel. But as Roy implies, it certainly seems that published estimates aside almost everyone is expecting "a surprise" from this company. Another distinct segment of opinion is thinking "what the hell is the stock doing up there when they've only reported one semi-good quarter?" (At least that's kind of what I'm hearing from Alomex.) And that segment of opinion, if Apple beats estimates, will probably not burst forth in song and rush out to buy AAPL. They'll say, "a ha, so they do have a little something going for them, maybe 25 bucks a chip isn't so bad."
Phil Lee posted some estimates of the stock's behavior the other day, and others have as well, but my concern is that these estimates are based on what would be sensible behavior, and the market does not, in my underdeveloped opinion, make much sense this past month. So can any of us put a finger on the source of (apparent) irrationality in the market's treatment of stock prices lately, and predict how it will affect AAPL?
- George |
