Seeking Alpha

Apple (AAPL -3.6%) has sold off in early trading, apparently on news clearing firms are raising...

Apple (AAPL -3.6%) has sold off in early trading, apparently on news clearing firms are raising their margin requirements for positions due to fears of being too heavily concentrated in the $526B company. One firm, COR Clearing, raised its margin requirement to 60% from 30%.
From other sites
Comments (51)
  • phildevoyd
    , contributor
    Comments (118) | Send Message
     
    Clearing firms that have adequate capital, software and staff do not need to do this.
    5 Dec 2012, 10:33 AM Reply Like
  • peacemaker2012
    , contributor
    Comments (21) | Send Message
     
    naive observation - what if all clearing houses required that on all stocks? what will happen to the market? the focus on Appl must be a story in itself. way beyond which house did what to whom? and why?
    5 Dec 2012, 03:05 PM Reply Like
  • credit_man
    , contributor
    Comments (172) | Send Message
     
    you can have adequate capital,software and staff but at the same time suffering from risk concentration due to your client flows.
    Apple may be simply too big to be a trading toy in the hands of options players......
    5 Dec 2012, 10:40 AM Reply Like
  • dab3z
    , contributor
    Comments (312) | Send Message
     
    Just one thing after another to deal with for AAPL. The volatility going both ways since July has been absurd. No reason to run all the way up to 705. No reason to run all the way down to 505. No reason to have a 10% bounce off 505 in less than a day and a half of trading. No reason to trim off almost 10% from 594 in a day of trading.

     

    If every stock traded like this, you'd never have any retail investors in the market. And that's not a good thing.
    5 Dec 2012, 10:41 AM Reply Like
  • credit_man
    , contributor
    Comments (172) | Send Message
     
    in any case it looks like people are obliged to exit.......-4.7% 549 now...
    5 Dec 2012, 10:42 AM Reply Like
  • pocohonta
    , contributor
    Comments (584) | Send Message
     
    The margin requirement has nothing to do with the company's fundamental, but help reduce leveraged speculation. People exiting for the wrong reason.
    5 Dec 2012, 11:13 AM Reply Like
  • dmarilley
    , contributor
    Comments (613) | Send Message
     
    What a disaster
    5 Dec 2012, 10:55 AM Reply Like
  • credit_man
    , contributor
    Comments (172) | Send Message
     
    @dab3z

     

    have to disagree
    nearly all of your "no reason" moves had in fact a reason......
    no doubt that AAPL volatility is pushed up by number of day traders involved but this stock is more "rational" than you think......
    5 Dec 2012, 10:55 AM Reply Like
  • dab3z
    , contributor
    Comments (312) | Send Message
     
    Rationalize it for me then. I can't wait to hear why a 10% jump/dip in a $500B+ market cap stock over a day and a half is reasonable trading.
    5 Dec 2012, 11:01 AM Reply Like
  • credit_man
    , contributor
    Comments (172) | Send Message
     
    find a trigger('reason") doesnt mean the move is "reasonable"
    it is what makes the market so attractive to punters.....
    but here we go:
    reason for 700$ was valuation/multiples .....
    reason for collapse to 505was doubt on apple capacity to cope with constrained delivery chain + question about innovation in the eye of iphone5 and ipad mini specs at a time where android/samsung were/are gaining traction.
    rebound was due to non rational part of the move towards 505(we call it technical.....!!!)
    and finally todays move is due to too big december open positions on options to pay christmas gifts..(sellers of volatility) that had to cut in panic due to margin increase rumor.

     

    here are your reasons despite i would agree a certain lack of rationality that once again is what a market is made of....
    5 Dec 2012, 11:25 AM Reply Like
  • dab3z
    , contributor
    Comments (312) | Send Message
     
    Guess I should have qualified that better. I was looking for rational explanations. My fault. I agree with most of what you wrote, except for the run up to 700. It was an overshoot, just like 644 was.
    5 Dec 2012, 12:02 PM Reply Like
  • dondisa
    , contributor
    Comments (34) | Send Message
     
    I disagree that 705 was an overshoot - what's excessive about a P/E of 16 for one of the two most profitable companies in the US, one of the 10 fastest growing companies in the world, and rated top innovator 3 years in a row? Especially when GOOG, much smaller and growing slower, is trading at 18-20+? AAPL's stock price hasn't consistently reflected its performance since 2001.

     

    Meanwhile, there's an entire industry badmouthing AAPL in search of eyeballs, driven by "pundits" who think they know more about the business than Tim Cook does.

     

    The truth is simply that beyond the issues of fund rebalancing, the market is a speculator's playground, and stock price is at the whims of their concerns, which may have nothing to do with what the average investor is concerned with, or any business reality.
    5 Dec 2012, 01:32 PM Reply Like
  • Anthony Wissel
    , contributor
    Comments (15) | Send Message
     
    90% of this is electronic based on price decline. The other is fear in the market. Either way wait a month and aapl will ride back to the 700 number by the end of January
    5 Dec 2012, 10:57 AM Reply Like
  • credit_man
    , contributor
    Comments (172) | Send Message
     
    @A Wissel

     

    tend to agree...meanwhile u need them........
    5 Dec 2012, 11:01 AM Reply Like
  • phildevoyd
    , contributor
    Comments (118) | Send Message
     
    Keep in mind that we are talking about retail accounts. Institutional accounts rarely have to deal with such rules. This squall will be over in 3 sessions unless other market forces intervene.
    5 Dec 2012, 11:02 AM Reply Like
  • Interesting Times
    , contributor
    Comments (11063) | Send Message
     
    Bye bye APPLE.....Traders are saying it could drop another 25%...Glad i sold it at $700 and i won't look back...

     

    Overpriced in this economy...sorry folks.
    5 Dec 2012, 11:14 AM Reply Like
  • credit_man
    , contributor
    Comments (172) | Send Message
     
    @interesting times

     

    overpriced? what model are you using? is obama s team using the same one?
    5 Dec 2012, 11:26 AM Reply Like
  • movies555
    , contributor
    Comments (821) | Send Message
     
    It's not that Apple is going anywhere, but the Apple "story" in terms of the investment thesis is over, possibly for the time being and possibly for longer. Apple needs innovation. Slightly new IPads and Ipods is not innovation, especially in a world of a $175 kindle fire and all manner of Samsung devices that are growing increasingly popular. As long as Apple is about the IPad mini/maxi/maxi mini/etc, I wouldn't be surprised if the stock continues to erode in value -

     

    Additionally, by the looks of the comments section for anything that is slightly negative towards Apple, it has further to go, as the fanboys who are just getting upset rather than making a case are still very apparent. The fanboy ratio (which can be used for anything) is still visibly high.

     

    I have nothing against Apple. They make very nice products, but putting out a new IPad and IPhone every several months eventually wears thin - and the competition is making a lot of progress. With the amount of talent at Apple, it's remarkable that that knowledge and skill hasn't been applied to electronics in other industries.
    5 Dec 2012, 11:40 AM Reply Like
  • dab3z
    , contributor
    Comments (312) | Send Message
     
    Show me the innovation that other companies are coming up with. Apple revolutionized the portable music player, the smartphone and the tablet. Everyone else is just hopping on the ship that Apple built.

     

    Google Glass? Please. Even if I wanted to use it I couldn't since I wear glasses.
    5 Dec 2012, 12:00 PM Reply Like
  • chopchop0
    , contributor
    Comments (3420) | Send Message
     
    Agreed regarding innovation, but at the levels AAPL is trading at (with or without considering the the cash position), it's priced nowhere near a growth stock.
    5 Dec 2012, 12:12 PM Reply Like
  • 2MuchDebt
    , contributor
    Comments (219) | Send Message
     
    Innovation matters, but profits and cash flow matter more. Apple continues to generate strong results for both.
    5 Dec 2012, 12:26 PM Reply Like
  • kmi
    , contributor
    Comments (4030) | Send Message
     
    " They make very nice products, but putting out a new IPad and IPhone every several months eventually wears thin - "

     

    That's the problem with Apple's model - single device doesn't work with incremental updates. It's why Samsung's model of hammering the market with infinitesimally different devices every 15 minutes seems to be working for it, it provides the illusion of 'progress' and 'improvement' for the A.D.D. light speed moving tech fan base....

     

    Before this latest series of painfully incremental updates, new i-Devices surpassed their antecendants by leaps and bounds, which worked nicely in the single model strategy.
    5 Dec 2012, 12:27 PM Reply Like
  • Applocrat
    , contributor
    Comments (957) | Send Message
     
    I understand what you're saying, but it might be interesting to consider how much the competition has adapted to Apple's model. Samsung focusing so much on the Galaxy line, Microsoft on the Lumia and Surface. Google with its Nexus Amazon with Kindle. It seems everyone is trying to making fewer, and better products.
    5 Dec 2012, 12:58 PM Reply Like
  • movies555
    , contributor
    Comments (821) | Send Message
     
    At least Google is diversified, with its hands in a lot of sectors. Google isn't without issues either on its current path, but I'd rather it at the moment than Apple, quite honestly, if I had to choose between the two..
    5 Dec 2012, 12:59 PM Reply Like
  • Dean Scarpinato
    , contributor
    Comments (372) | Send Message
     
    Aren't they still bringing in over $100B a year in revenue? Doesn't that count for something?
    5 Dec 2012, 01:12 PM Reply Like
  • dab3z
    , contributor
    Comments (312) | Send Message
     
    $100B? They should be bringing in $500B. That's the only way I'd buy.

     

    /sarcasm
    5 Dec 2012, 01:14 PM Reply Like
  • jeezuz30
    , contributor
    Comments (358) | Send Message
     
    "As long as Apple is about the IPad mini/maxi/maxi mini/etc, I wouldn't be surprised if the stock continues to erode in value"

     

    Got a good kick out of your maxi pad line
    5 Dec 2012, 06:02 PM Reply Like
  • Sammy Lee
    , contributor
    Comments (304) | Send Message
     
    I think investors are seriously considering the sustainability of those cash flows with AAPL's competitive advantage getting eroded quarter after quarter. Plus management is overly concerned with lawsuits instead of long-term value creation.
    5 Dec 2012, 08:01 PM Reply Like
  • New Century
    , contributor
    Comments (130) | Send Message
     
    Samsung GS3 is technologically superior to the iPhone 4 & 5. Sure, if you like iOS and Apple's industrial design there are reasons to buy an iPhone, but based on guts, Apple doesn't win. (There are plenty of other devices that this can be said about as well.)

     

    Rumor has it that the GS4 will have a 1080p screen. Maybe the next iPhone will get another row of apps?
    6 Dec 2012, 01:09 AM Reply Like
  • User 416885
    , contributor
    Comment (1) | Send Message
     
    " portable music player, the smartphone and the tablet. "

     

    Yes but that was under Jobs, not Cook. BIG difference.
    6 Dec 2012, 02:55 AM Reply Like
  • movies555
    , contributor
    Comments (821) | Send Message
     
    "Rumor has it that the GS4 will have a 1080p screen. Maybe the next iPhone will get another row of apps?"

     

    Zing. You sound like one of those Samsung ads with people standing in line for the new Iphone. "This feels like "deja, deja, deja, deja, deja vu."
    6 Dec 2012, 04:46 AM Reply Like
  • stevesko
    , contributor
    Comments (60) | Send Message
     
    PE of what 6 ex cash... yea thats over valued for a company growing as fast as AAPL.
    5 Dec 2012, 11:44 AM Reply Like
  • TwistTie
    , contributor
    Comments (2476) | Send Message
     
    What about good old year-end and predictable tax-related profit taking?

     

    Occam's razor anyone?

     

    I don't know.

     

    If so, it could get real ugly for a while. Watch for the stock to rocket up in January. It should be fascinating.
    5 Dec 2012, 11:49 AM Reply Like
  • raincity
    , contributor
    Comments (220) | Send Message
     
    It's unrealistic to expect a "home run" from Apple every year. That is not the way the company operates. Revolutionary products appear every 3-7 years and then those products are iterated on for improvement during that time. I understand why Apple takes so much heat, they are the leaders after all. If not for Apple's current design portfolio the knock off companies out there would still be designing phones looking like blackberry's and tablets would be non-existent. They wait for Apple to prove a concept and then they copy.
    5 Dec 2012, 12:17 PM Reply Like
  • movies555
    , contributor
    Comments (821) | Send Message
     
    It's not a matter of a home run. It's the fact that it's not a diversified company, and at some point, it has to move beyond IPad, IPod and IPhone - and given how fast things are moving, that point is starting to seem like it should have been yesterday.

     

    Again, nothing against Apple and I'm not saying it's going to tank, but what's the thesis? All the discussion of going to a thousand a share, that's not going to happen on the current path, and I think it's going to be difficult to get to the upper 700's. More than likely, for the time being, it's not going to do anything or gradually slide lower at let until all of the fanboys leave in disappointment.
    5 Dec 2012, 12:56 PM Reply Like
  • movies555
    , contributor
    Comments (821) | Send Message
     
    And how many people start to think I don't need an IPad for $xxx when the Kindle Fire is $179 or any number of other devices are "just fine" in this economy for less than the IPad? You have Amazon selling Kindles at cost - when you have things like Amazon selling tablets at cost and other competition taking all manner of action, doesn't that cause issues for Apple, at least in its current, I-centric form?
    5 Dec 2012, 01:06 PM Reply Like
  • Poypoy
    , contributor
    Comments (58) | Send Message
     
    That is hilarious. They are one of the biggest players in the online music market. They sell a ridiculous amount of apps and other programs through the apple store. Their laptops/books are the envy of their peers. When apple releases their much anticipated TV watch for the stock to shoot up 30% in the week
    5 Dec 2012, 01:07 PM Reply Like
  • bosco115
    , contributor
    Comments (196) | Send Message
     
    You're right, movies555. Except for desktops, laptops, personal music players, smartphones, tablets, home media centers, hardware components, software, movies, music, and books, they just aren't very diversified.
    5 Dec 2012, 01:54 PM Reply Like
  • movies555
    , contributor
    Comments (821) | Send Message
     
    How is that diversified? They are entirely reliant on the handful of idevices (pod, pad, phone, mac) and selling things on the app store. No one's saying they are going into the tank, simply that the company needs to evolve over time in an ultra-competitive sector and they aren't. People are still going to be buying Apple products, but things like Note II and Kindle Fire are taking away audience, bit-by-bit. The analysts talking a thousand a share or even 800-900 are going to need something new from the company to begin to have a possibility of seeing those numbers over time.

     

    And yeesh, the fanboys for Apple really get up in arms whenever someone doesn't heap praise on the company. When the fanboys give up is when it's time to get into Apple again - by the looks of it, that's a LOOONNNNGGGGG way off.
    5 Dec 2012, 07:36 PM Reply Like
  • bosco115
    , contributor
    Comments (196) | Send Message
     
    Please talk to Cisco and GE about the benefits of diversification.

     

    This company is trading at 12.5 TTM P/E. Their entire lineup is less than six months old, they're all available for the holiday shopping season, and they're selling so fast that they can't keep them in stock. After January earnings, the P/E is going to be insanely low if the price doesn't move.

     

    Point being, they don't need to create any new product lines to justify a radical price increase. The PPS could hit $800 today, and it'll still have a lower valuation than Google, a company that is growing slower.
    6 Dec 2012, 09:55 AM Reply Like
  • mimailmula
    , contributor
    Comments (44) | Send Message
     
    I thought positioning would be a lot cleaner after it fell down all the way to 505... but the price action looks horrible! Think we'll see it at 530 tomorrow...
    5 Dec 2012, 12:33 PM Reply Like
  • John1138
    , contributor
    Comments (161) | Send Message
     
    Tim Cook's birth sign makes any further downward movement unlikely.
    5 Dec 2012, 12:55 PM Reply Like
  • flumeride
    , contributor
    Comments (283) | Send Message
     
    If today's drop is due to margin requirements, wouldn't a stock split help? At $500 per share it takes $50,000 in cash to cover a single puts or call. With a 4 to 1 split, the stock goes to $125 and covering an option goes down to $12,500.
    5 Dec 2012, 02:15 PM Reply Like
  • The Last Boomer
    , contributor
    Comments (898) | Send Message
     
    AAPL has become a very volatile stock. It's become a momentum stock. In this situation it is not wise to rely on valuation and intrinsic value. The stock may end up anywhere driven by traders. I played the oversold condition buying at 515 and selling at 562 but then I exited completely. I read some good traders who waited for AAPL's bounce to hit the confluence of the 10-week and 40-week moving averages that acted as resistance and shorted AAPL at around 590. I did not have the guts to follow. This stock belongs to the momentum traders now.
    5 Dec 2012, 02:21 PM Reply Like
  • 100XT
    , contributor
    Comments (72) | Send Message
     
    Apple is a technical trade. Look at some technical charts and make some decisions on where you want to be. There is support at $500 area. But Apple needs to do something to stop the bleeding or we will reach and possibly breach this level. Remember, there are hundreds/thousands( with huge amount of money available) of traders sitting behind computer screens, making $$$$$ on these swings. They ride the momentum up and DOWN. Every investor can only take so much pain. Individual investors are always behind the curve and typically sell at the bottom. Be careful. The good news is that Apple is a VERY sound company. As far as I can tell the long term story is still intact. Good luck and be strong.
    5 Dec 2012, 02:49 PM Reply Like
  • bethkc
    , contributor
    Comments (7) | Send Message
     
    Beth from KC here

     

    Drop like a rock, Baby!!!!!!!!!!!!!!!!!!...

     

    Here comes $400!!!!!!!!

     

    Good Luck to all!!!!!!!!!!
    5 Dec 2012, 02:57 PM Reply Like
  • Longaapl1200
    , contributor
    Comments (22) | Send Message
     
    As a long time (5 years) investor in AAPL I am sitting back and enjoying the ride. Yes, I lost the gains of the last few weeks but I am so far ahead I can afford it. My advice is to invest for the long term, play puts and calls for the short term.
    5 Dec 2012, 02:58 PM Reply Like
  • tclark13
    , contributor
    Comments (133) | Send Message
     
    Only up 38% this year. One of my worst performers! Let me say I am a long term investor and I don't claim to have a clue where anythings going. If you're a short term investor maybe you have reason to be upset about apples performance over the last couple months. Everybodys great at telling me why a stock performed the way it did AFTER it's made it's move. That 2020 hindsights really useless. I've ridden plenty of ups and downs in this one over the years and if they pound it I'll be delighted to buy a little more. I'd be thrilled to swap some of my mlp's for this one! lol!
    5 Dec 2012, 08:27 PM Reply Like
  • paulvard
    , contributor
    Comments (116) | Send Message
     
    Big money is dumping it and AAPL will be a tremendous buy once there is an inkling of a ground-breaking innovation happens and I am keeping my ear to the ground
    5 Dec 2012, 09:24 PM Reply Like
  • divinecomedy
    , contributor
    Comments (466) | Send Message
     
    Even with zero innovation, I still see people crowding Apple stores in China on my trip a week ago and all they had was the iPhone 4s. Anyone please justify to me why Amazon should have a higher P/E than Apple please.
    6 Dec 2012, 12:27 AM Reply Like
  • jtofabc
    , contributor
    Comments (12) | Send Message
     
    Thanks for the in put. I think I will double down on AAPL Monday after the market opens say at about 535.
    7 Dec 2012, 07:53 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector