Why AAPL stock will trade below $300 this week.

There has been a serious influx of information and speculation regarding Apple stock during the last 24 hours. The media has reported that Steve Jobs has taken his third medical leave of absence in a decade and will no longer oversee the day-to-day operations of the company that has been the American equity markets darling in recent history. An interesting excerpt from a recent media article states, (http://marketplayground.com/2011/01/17/apple-nasdaqaapl-ceo-steve-jobs-takes-leave-of-absence/)

"The lack of time frame for the length of Job’s leave of absence “suggests there are long-term issues with his health, said analyst Alexander Peterc of Exane BNP Paribas in London, reported Bloomberg. This is Job’s second recent leave of absence. In 2009 he took a 6-month hiatus for a liver transplant. Jobs, 55, is a cancer survivor. Jobs turned around Apple from a struggling company to the second largest U.S. corporation by market value (behind Exxon Mobile), and the largest valued tech company in the world."

This is a serious situation Apple find itself in, and while many speculate that Timothy D. Cook, the current Chief Operating Officer, is perfectly capable of a seamless transition by taking over for jobs, lets not be fooled- There is absolutely no way to replace Steven P. Jobs. You cannot replace the ingenuity, the creativity and the uncanny ability to profit off the demands of the complex American consumer as this man has done. He is the Intellectual capital behind the unique, user-friendly, seamless, and ultimately trendy corporation that has become the enigma of Apple. The same man who meticulously develops the inner workings of all his products and refuses to sacrifice quality for profit or short term consumer whims.

If you take a look further back in time to study Jobs cinvolvement in the direct creation of Apple's products and patents, you may be surprised to find out he has his name associated with many patents responsible for some of the companies most successful products. According to a Wired.com article written in 2009, (http://www.wired.com/gadgetlab/2009/05/jobspatents/)

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Technologizer’s Harry McCracken dug through Google Patent Search, pulling up any patent he could find including Jobs’ name. And though it’s unclear just what the CEO’s explicit contribution to each patent was, a more fascinating observation is that his name typically appears on patents depicting Apple products that eventually become a reality. A 2004 patent (pictured to the right) portrays what appears to be a touchscreen tablet, a rumored device that many are predicting Apple will deliver in the near future. 

Other highlights? Jobs even contributed to the white power bricks used to charge Mac notebooks. You know, the ones with the little wings that flip out, which you twirl the cable around to safely store it away. Clearly he cares about the mundane stuff, too."

Yep, you read that correctly, Steve Jobs is responsible for the patent of the "touchscreen tablet" aka IPad, which is hailed by many enthusiasts as one of the greatest technological inventions in recent history. This is but one example of the integral part he plays in the success of this company, his vision is clearly a main factor in the stock's rise of 307% in the past 5 years.

Another potential snag is that Apple's earnings are due tomorrow after the bell, and while they consistently "under promise, over deliver", this could shape up to be the perfect storm of uncertainty. With investors late to purchase the equity may panic out of their positions which will go solidly red over the weekend, triggering stop loss orders, coinciding with the stock being priced for perfection and little to no pullbacks in recent trading history, there could be serious downside coming to this security.  

The stock market is a forward looking proxy of a company's perceived future prospects, and one thing the stock market despises is uncertainty. After today,the uncertaintly surrounding AAPL like a storm cloud is at a point arguably higher than it has been in the past year plus.  Shareholders have a very tough decision to make tomorrow regarding their Apple position; hold and hope everything will be settle out eventually, or sell and wait for the dust to clear before re-entering the position. I believe I know the answer that history tells us the retail investor will choose to do. Also keep in mind the markets are very ripe for a healthy pullback, one that is long overdue in my mind, and could pile on to the current negative situation.

I hope all Apple investors make the right decision for their own unique cases, and for the above said reasons I do believe AAPL stock will trade below $300 this upcoming week.



 




Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.