Apple Inc. (NASDAQ:AAPL) shares were down 4 percent yesterday. A report from Piper Jaffray analyst, Gene Munster, considers four factors which are responsible for the decline in the Apple Inc. (NASDAQ:AAPL) shares. The report says “We believe the two primary reasons for the sell-off are a misinterpreted Digitimes story and a technical breakdown in shares”. The other two factors being an increase in margin requirements and a partnership between China Mobile and Nokia Corporation (NYSE:NOK).
As per an article from Digitimes yesterday, iPhone5 is selling well, and there is a good possibility for an upside to the Street’s 43-45 million estimate for December. The same article also suggested a possible 20 percent quarterly decline in the demand of Apple parts and components in March. The report believes “this 20% decline is to be expected coming off of a launch quarter and do not believe it is an indication of how units might trend in March. As an example, if Apple ordered 52 million iPhones from the channel in December and 48 million are sold, that implies a 4 million unit channel fill and 41.5 million units ordered from Apple in March. That would mean 44.5 million units would be available for sale in March, which would mean our 43 million iPhone estimate for March is well within the range of probability”.
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The report believes that Apple’s 50 days moving average, which is nearing its 200 day moving average, is a negative technical sign. Based on this indication, the report argues that most of the damage has already been done to the iPhone maker’s stock, but there could be a “worst case additional 10% move to the downside, which could be the next meaningful area of support”.
As per a report from CNBC, COR Clearing is raising margin requirements on Apple Inc. (NASDAQ:AAPL) from 30 percent to 60 percent. Piper Jaffray believes that these margin requirements will have no effect on the fundamentals of the company. The report said “though there is not much idea about what percentage of Apple Inc. (NASDAQ:AAPL) shares are bought on margin, but the requirement change will not affect fundamentals of AAPL”.
Nokia Corporation (NYSE:NOK) announced yesterday that it would launch its Lumia handset on the largest network service provider in China, China Mobile by the end of the year. The report believes that some of the investors might have thought that China Mobile will now carry the Lumia instead of the iPhone. This speculation from investors is definitely misleading, as China Mobile already carries multiple smartphones from multiple vendors. The report says “We continue to expect China Mobile to add the iPhone in the back half of 2013”.
The 4 percent decline in Apple Inc. (NASDAQ:AAPL) shares, is actually a buying opportunity for investors, as the report is maintaining an “Overweight rating and $900 target”.