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Apple Is Doomed: What Analysts Aren’t Telling You

 April 04, 2012 09:21 PM

Before you buy one share of Apple, I have two words for you: plastic shoes.

Crocs — the company behind those ugly, squishy sandals — was having a banner year in 2007. The stock was booming. At one point, sales projections forecast that every man, woman and child in the country would soon own several pairs of Crocs sandals. The share price doubled. Then it doubled again.

That's when reality set in…

Following a parabolic ascent that lasted nearly a year, Crocs shares tumbled. After all, it turns out there actually is a limit to how many plastic sandals a company can sell. From a high of $75, the stock plummeted to less than $1.25 in about 11 months.

Today, if you swap out neon shoes for iPhones, you can see the writing on the wall. Apple's spectacular run is all but over.

[Related -Google Inc (GOOG): Why Nest Labs Deal Is A Wakeup Call For Apple Inc.?]

Unfortunately, most investors won't know what's coming until it's too late. Just this week, an analyst from Topeka Capital Markets slapped a $1,000 price target on Apple stock. That would value the company at just a little more than $1 trillion.

In reality, Apple will never hit the $1 trillion milestone. In fact, this scenario is downright impossible. If you own shares of Apple, you should sell them immediately. If you're thinking of buying now, don't.

Apple is headed for a painful and inevitable correction. And when Apple finally implodes, the destructive ripples will reach beyond dazed shareholders. In fact, an Apple crash could have a far-reaching effect on the tech sector, the Nasdaq, and even the market at-large.

[Related -Apple Inc. (NASDAQ:AAPL): Why Gross Margins Will Expand In 2014 and Beyond?]

Sleuth correspondent Chris Mayer detailed several fundamental concerns regarding Apple in his column less than one month ago. Chris questions the sustainability of iPhone subsidies, growing competition from Android products, and the loss of visionary leader Steve Jobs. In my opinion, these are all valid concerns.

But none of these fundamental arguments matter anymore. Forget everything you've read about Apple. Forget about its growth prospects, sales numbers, and international expansion. What you have to understand is that Apple Inc. has effectively severed itself from Apple stock. Nothing the company says or does will have any effect on how this scenario will end. Apple is now at the point of no return. The stock has entered the beginning stages of an epic meltdown.

Here's how Apple's final moments in the spotlight will play out:

The first step toward its downfall is an abrupt change in how the stock trades. This is already happening. Apple has gone from outperforming the market every year to outperforming stocks nearly every single day. The trend has accelerated. The stock has spent very little time consolidating its big move.

Next Page >>12


4/10/2012 10:36:57 PM
by Les
I have held AAPL stock for about 20 years and have read comments like yours more times than I can count. I'm not a Pollyanna who thinks any stock can soar indefinitely, but I also believe in the power of rational thinking. Your comments comparing AAPL to CROX is, quite simply, a total crock (pun intended). CROX was trading at a P/E of 40 during the time you describe, and AAPL is presently trading at a P/E of 18. Furthermore, as you point out, CROX made easily copied plastic shoes while AAPL makes high-tech, patent protected electronics and has developed an ecosystem that is unmatched in the industry in which it operates. The next time you have an urge to publish an article proclaiming the sky is falling, at least take the time to construct a reasoned analysis to support your assertions.
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