Selling Apple Stock

When selling a stock I like to have a variety of reasons to support my decisions.

Here’s why I sold out my AAPL stock today.

We’d all like to think Apple makes its money on software and not hardware, but that’s not looking at the bigger picture. Once the hardware becomes obsolete, the software becomes obsolete along with it, particularly so in Apples case.  For this reason, Apple must release new innovative hardware to grow as a company.  If it is not innovative and game-changing, Apple lose brand equity.  If they lose brand equity, then Apple loses the price premium advantage that lets them charge 1.5 times the price a similar “PC” product would go for.  Without that premium, their margins taper out and they’re just another tech company lurching around in the dark.

Steve Jobs – Born 1955.  That makes him 56.  Steve Jobs IS Apple.  Whenever he feels like taking a break and misses an event the stock usually drops a few percent.  What if he really did leave?  I suggest the Apple stock would tank out.  It’s not nice to mention, but he has had a cancerous tumor in his pancreas in the past.  If it returns in a more malignant form, it could instantly cause a stock run on Apple shares.  Unfortunately, this cloud will always be hovering over everything Steve does and will grow darker with time.  Steve IS Apple.

Malware issues are becoming more commonplace with Apple software and Operating Systems.  This will only get worse as Mac now has a large enough market share and enough overconfident users to be a sizable target for malware developers.  Apple software has not been tested in the “real world” like Microsoft operating systems have over the years.  The Apple Malware wave has begun and its untapped territory ripe for the picking.

Apple stock chart dynamicsYahoo Finance (new window)

Notice how from Jan 2011 onwards AAPL stock has practically zero growth?  That is known the stagnation stage.  Stock (and everything in life) comes in 3 stages:

  • Growth
  • Stagnation
  • Decline

It’s very rare, although it can of course happen, for a stock in stagnation to re-achieve growth potential.  Usually this happens with an innovative product launch or massive pivot.  If any company can innovate massively, it’s Apple.  But I think they’ve topped out and it’s stability or decline from this point on.

Additionally, hedge funds have sold heavily early this year.  Most likely after seeing the stagnation indicators.  Hedge funds selling apple stock (new window).

As mentioned above, they have now moved their focus to Software.  Software is easy and relatively low risk.  Cheap to manufacture (practically free) and easy to sell through the Apple app store, with high R&D costs.  But software does not create a market and the IPhone, Apples biggest product in sales alone, is getting stale.  Without a refresh every year, as every customer now expects and demands, they will begin to lose market share to rivals with better products and better systems.  Lastly, Apple moving into software shows clearly they’re out of ideas on the hardware front.

ICloud services are going to be announced at the next big event and to be blunt, no “normal” non-tech users actually care.  Just like they don’t care about the Ipad.  Both the Apple Ipad and the fancy tech services are for geeks alone.  Making product for geeks alone does not lead to growth, it leads to stagnation.

Why I Sold Apple Stock:

Software doesn’t move product and Apples moving into software as their USP.  Apple is still Steve Jobs’ baby, PR and Malware issues and a reduction in innovation.  Apples stock chart hints heavily at stagnation, hedge funds have moved out and now I’m out.

Disclaimer: This article, just like every article on is my personal opinion.  For legal purposes, it is not stock advice and markets can go up and down.  Research all stock options before making a potentially life changing decision.

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15 Responses to Selling Apple Stock

  1. “Just like they don’t care about the Ipad.”

    You cant actually be serious when you say this can you? The iPad is only one of the most successful consumer products of all time. I have seen 6 and 60 year olds playing with iPads.

    That aside I have a hard time agreeing with much of anything within this post. Why do you cite malware as an upcoming problem for Apple? Both Windows OS and Interner Explorer have been plagued with security problems for years and the “normal non-tech” users just dont care.

    That aside, while there may not be a lot of growth potential in Apple stock you have to consider the amount of cash they have on hand. A big chunk of what you are buying in a share of Apple stock is liquid cash. Around $85 per share to be specific.



    • Covering each point:
      1. IPAD – Other than the geeks I don’t know anyone who still has an Ipad. Most have now sold Ipad1 and have no intention of ever purchasing another tablet. The reason they cite is “I don’t actually have anything to do on it”. Again it’s a thing about geeks having a good reason to use something like that, but for normal non techy users it’s pretty much a paperweight you can play some games on.
      2. MALWARE – It’s becoming an issue. With the user base of Apple software being non technical (thats who they aimed for as you know) the ROI of malware is much higher than on Windows devices (ignoring linux for obvious reasons). Malware on Apple devices has begun. Apple are not prepared for it like Microsoft are, and it’s going to hurt their brand in a big way. Users will start to care when they start losing money and Apple device Malware starts to hit the headlines.
      3. I didn’t look into Apples cash position, but what do you see them acquiring with that?.

  2. Do you think the currently p/e of aapl is to high and think that there will be no eps growth in the next quarters?
    What is your eps estimate for FY11 and for FY12?.

    • I tend to base my trades on fundamentals/charts rather than p/e and eps as I find it to be a more reliable method. P/e and eps can easily be manipulated through creative accounting (not saying Apple are doing this in any way). Having said that, p/e is about right for now, but I see eps dropping FY11 and further in FY12. Remember, it’s currently in stagnation, not decline. Factors to look out for signaling decline would be: brand image becoming more tarnished in the mass media through customer service issues/malware and competitors taking market share through tech catch up (taking away Apples edge and USP).

  3. In regards to your first two points, your sample sizes are way too small to be drawing the conclusions the way you are. How do you explain the iPads sales numbers and 90% marketshare?

    As for #3 I have no idea what Apple is going to acquire, but isn’t that liquidity a reason to buy rather than sell Apple stock?.

    • Ipad sales – Hype leading to early sales spike and Ebayers. Further, most people bought in because it’s an Apple device, not because they need one. Once they realize they don’t need it they won’t be back to drop $500 on Ipad 3/4/5/6. More so in these days when belts are tightening. Love for Apple is decreasing. The brand is getting stale.

      Liquidity alone is not a good investment. It’s much nicer to know a company is spending their cash on things that bring a greater return on investment and assets that pay off with growth. Apple isn’t Microsoft, they can’t sit and wait out a storm, as market leader and with a brand driven on innovation they need to be on the front lines.

  4. Go sell AAPL. I won’t do that. I think Apple’s largest growth hasn’t come yet. Now only geeks use apple products, after a few years, you will see the whole population go for it.

  5. If anything, iCloud is going to be what makes the iPhone and iPad more compelling to users, especially non technical people. I could write many paragraphs on how the cloud is going to make it easier to buy musc and movies from the iTunes store, driving even more revenue Apple’s way, and how it will allow Apple to make cheaper devices with the same level of functionality and user experience. But since I’m typing this from my iPad, I’ll leave it as an exercise to the reader.

    • The whole “cloud” push just isn’t getting traction with non-tech users. They don’t understand what it is or why they should want it. A new way to get music or movies isn’t really required at this stage, they just want cool fresh hardware to show their friends. I did a quick Facebook survey, out of 20 users with an iPhone only 2 used apps. The other 18 used it just to make calls, text and check emails. 6 played games every now and then.

  6. >”Lastly, Apple moving into software shows clearly they’re out of ideas on the hardware front.”

    lololol what. No dude, just no. They’ll launch more hardware this fall just like they always do.

    Re: Steve being Apple…yes. When Steve leaves Apple, so follows innovation.

    • They will of course release new hardware on schedule, but will it have that BANG element (retina display etc.)? More RAM isn’t really all that exciting and while it may move an Android device, it isn’t enough to get people to upgrade on an i device. How thin can you make an iphone? I think they’re out of breath.

  7. Remarkable insights! I have been trying to find something like this for a long time now. Bless you!.