Tags: Wasik | Apple | watch | stock

Financial Author Wasik: 'Apple Will Disappoint Big Money'

By    |   Friday, 13 March 2015 06:20 AM

Apple's latest product, Apple Watch, might be impressive, but that doesn't mean the company's stock will keep rising, says financial author John Wasik.
 
"In the world of innovation and technology, the investing world puts you on the shortest leash imaginable," he writes in an article for Forbes.
 
"Remember the salad days of Xerox, Polaroid, Motorola and Nokia? Where are they now? That's why I think Apple will disappoint the big money behind the world's highest-capitalized stock."
 
Disappointing Apple Watch sales would "trigger this huge confidence breach in a stock many have predicted will become the first $1 trillion stock in market value," Wasik states. Apple now has a market cap of more than $700 billion.
 
Deutsche Bank analyst Sherri Scribner says in a commentary obtained by MarketWatch that Apple Watch sales might total $26 billion a year by 2018.
 
But Wasik says Apple's Watch might not develop the same following as its other devices, because the watch has to be used in conjunction with an iPhone. "It's not a stand-alone product," he notes.
 
In addition, Samsung, LG and Sony already have smart watches on the market.
 
"There's a herd mentality behind the popularity of the stock," Wasik explains.
 
"I've always thought that people bought Apple products not so much based on value, but status. When the status goes away, consumers realize they can find the same thing at a lower price," he adds.
 
"Will this happen to Apple? I don't know, but it seems to follow a trend that follows most bubbles based on human emotion. And when the market — smart consumers — realize that they don't need to overpay for something, they shift en masse."
 
As for Scribner, while she expects Apple to beat its competitors on smart watch sales this year, that doesn't make her bullish on the company's stock.
 
The iPhone accounted for 69 percent of Apple's revenue in the latest quarter, meaning there are "limited catalysts" to push up the stock price, she argues.
 
Scribner predicts that watch sales will at most make up 10 percent of total revenue and earnings per share by 2018. Apple's revenue totaled $200 billion in the latest 12-month period.
 
She has a hold rating on Apple stock and a target price of $110.
 
Most analysts are more bullish than Scribner, with an average price target is $134.92, according to FactSet. And many experts see a market capitalization of $1 trillion for Apple as the next market milestone.

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Apple's latest product, Apple Watch, might be impressive, but that doesn't mean the company's stock will keep rising, says financial author John Wasik.
Wasik, Apple, watch, stock
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2015-20-13
Friday, 13 March 2015 06:20 AM
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