Apple Inc. (NASDAQ:AAPL) reported better than expected results on Thursday, helping it cross the $900 billion market cap briefly. The stock is already up 45% this year. Despite this, one strategist is recommending a sell on Apple.
Apple market cap – has it gone too far?
Larry McDonald, with ACG Analytics, thinks that the stock has rallied way too much even before the latest earnings report, according to CNBC. McDonald notes that the Apple market cap is $865 billion, and the stock is trading 15% above its 200-day moving average. According to him, all of these factors suggest that the stock is a sell.
“That is something you don’t just want to walk away from, [you want to run away]. It’s a screaming sell,” McDonald said on CNBC’s “Power Lunch.”
Since the financial crisis, Warren Buffett's Berkshire Hathaway has had significant exposure to financial stocks in its portfolio. Q1 2021 hedge fund letters, conferences and more At the end of March this year, Bank of America accounted for nearly 15% of the conglomerate's vast equity portfolio. Until very recently, Wells Fargo was also a prominent Read More
Apple market cap, however, has been racing towards $1 trillion over the past three quarters. The iPhone maker will be hoping that the iPhone X will push the Apple market cap to cross that level. Early reviews of the iPhone X have been positive with the phone being touted as the “best iPhone yet.” So, there are good chances of the stock crossing the trillion mark this holiday season.
For the fiscal fourth-quarter, Apple sold 2.6% more iPhones including the less demanded iPhone 8. The company is forecasting total revenue to touch $84 billion to $87 billion in the holiday quarter, around 7% to 11% higher than the previous year.
In addition, the company is also cash rich, with $268.9 billion in cash and cash equivalents. Further, the upcoming tax reforms are also set to benefit the company significantly. CFRA analyst Scott Kessler believes Apple would benefit most from one tax reform – a lower tax rate on repatriated foreign profits, notes a report from CNBC.
“You want people to use this money in the United States to invest more,” Apple CEO Tim Cook told CNBC’s Jim Cramer, in May.
Has Apple lost its “cool”?
Many expect the iPhone X to encourage more users to trade the older iPhones with the latest one. However, one analyst is “skeptical” on this.
Foreign exchange strategist at BK Asset management, Borris Schlossberg, believes that Apple has lost some of its edge recently. “I think it’s very much ‘sell the news’ at this point. I think everyone is focused on a number. But it may be worthwhile to think about feelings at this point,” Schlossberg said Tuesday on CNBC’s “Trading Nation.”
Talking about Apple, the expert, who admitted being an “Apple fanboy,” noted that Apple is a luxury company, and the worst situation arrives when a company like Apple losses its “cool.” “Apple has really lost a lot of its cool over the last two years because its products just have not been up to spec in many ways,” the analyst said.
Schlossberg noted that at this point Apple is surrounded by excessive enthusiasm around its product, but unless it translates into sales and customers are ready to buy the iPhone X at $1000, it’s of no use. “I remain highly skeptical they are going to get the kind of demand the market is looking for,” the analyst said.