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Jim Cramer: Don't Sell Apple Just Yet Although Stock Will Drop More

(Mohamed Ahmed Soliman | Dreamstime)

By    |   Thursday, 03 January 2019 04:23 PM

Investment guru Jim Cramer urges investors in Apple Inc. to remain patient, even though the share price may fall even lower.

Apple shares tumbled as much as 10 percent on Thursday after the iPhone maker blamed weak China demand for its revenue shortfall in the holiday quarter, a clear sign of the company’s struggles in the world’s largest smartphone market.

The rare revenue warning - the company’s first in nearly 12 years - sent shockwaves through global financial markets with chipmakers that supply to Apple being the hardest hit, Reuters said.

The selloff in Apple dragged its market capitalization below that of Alphabet Inc and set the stock for its biggest intra-day percentage fall in almost six years.

Meanwhile, Cramer predicted Apple’s stock price (AAPL) could eventually bottom out at $120 per share. Apple shares closed Thursday at $142.59, down $15.33, or 9.7 percent.

However, Cramer, whose charitable trust owns shares of Apple, told CNBC on Thursday he likes the stock over the long term. He's also long warned investors against selling Apple's stock.

Wall Street analysts scrambled to cut their price targets on the stock, with at least 17 of them lowering their price estimates.

Monness, Crespi, Hardt & Co and Nomura Instinet made the most aggressive moves, slashing their price target by $100 to $200 and $175, respectively. The current median price target is $186.

In a note titled “Apple’s Miss: Bridging the Gap Between Perception and Reality”, long-time Apple analyst Gene Munster from Loup Ventures said while the revenue miss was largely expected, the magnitude of the miss was disappointing.

“It’s understandable that investors are piecing together what went wrong and its impact on the business longer-term,” Munster said.

Apple Chief Executive Officer Tim Cook in a letter to shareholders said on Wednesday the company did not foresee the magnitude of the economic deceleration in China, adding that trade tensions between Washington and Beijing further pressured the company.

In November, Cook cited slowing growth in emerging markets such as Brazil, India and Russia for lower-than-anticipated sales estimates for the company’s first quarter. But Cook specifically said then that he “would not put China in that category” of countries with troubled growth.

Apple’s dour revenue warning was not entirely a surprise. Many analysts and investors have worried about a slowdown in iPhone sales since the company said in November it would stop disclosing unit sales data for its phones and other hardware products.

The outlook cut exacerbated worries that Apple may be falling out of favor with its users in China, given the company’s push on pricing and availability of cheaper options from competitors such as Huawei Technologies.

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Investment guru Jim Cramer urges investors in Apple to remain patient, even though the share price may fall even lower.
jim cramer, apple, stock, sell
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2019-23-03
Thursday, 03 January 2019 04:23 PM
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