Apple’s share price recovered some of its recent losses yesterday, closing at $541, up from a recent low of $529 on 10 December, but a long time from it’s all-time high of $705 during trading on 21 September.
There is the usual speculation today as to what caused the rebound. The Motley Fool suggests a few reasons:
1) Topeka Capital Markets analyst Brian White’s claim that Apple’s suppliers posted “above average” sales increases in November, which he says suggests that Apple is building a lot of devices. Of note: Foxconn’s revenue rose by 28%, and Apple represents up to 40% of Foxconn’s business.
2) News that Apple now has 26.7% of the global LTE 4G market. Samsung’s share of the LTE 4G market fell to 40%.
3) The upcoming launch of the iPhone 5 in China. China Unicom has announced 300,000 preorders.
4) Weak sales of the Microsoft Surface.
Another reason for the rebound may be related to news that Apple, Samsung, RIM and others have sent a letter to US Congress asking them to open up additional operating spectrum for mobile phones. They suggest that "Authorizing new spectrum auctions is timely and relevant," referring to the fiscal cliff of spending cuts and tax increases expected to hit in the new year, reports AppleInsider.
It seems likely that the recent massive sell off of Apple stock is to avoid capital gains tax increases due to hit soon.
The stock may still recover and eventually hit $1,000, claims an analyst today, although he notes that he is less confident than he was about the target.
Nigam Srora, writing for Forbes, has reevaluated his expectation that Apple’s share price could hit $1,000, suggesting that it’s still possible, but the probability is now down to 53%.
Reasons for his declining confidence are the wide use of non-Apple products in Asia.
However, he believes that Apple could still make it to $1,000 if Apple CEO Tim Cook “is able to follow Steve Jobs’ formula for running the company”.
Jobs formula was: “Introduce a major innovation every three years”, writes Nigam Srora. In 2001 Apple introduced the iPod. In 2004 Apple introduced “major innovations in a new generation of iPods”. The iPhone came in 2007. The iPad in 2010. (Of course, we’d add that three years prior to the iPod, the iMac launched in 1998).
“To break out of the rut Apple stock is in, Apple needs to introduce not only a new innovation, but a major new category. If Apple were to introduce iTV that was not merely evolutionary but revolutionary on par with iPhone and iPad introductions, Apple stock would start a new strong leg higher,” writes Srora.