Once in a blue moon former Wall Street analyst turned tech blogger Henry Blodget puts on his old analyst hat and does a deep dive on a stock. Today he looks at Apple, and – shockingly – says he can’t rule out the chance that Apple’s recent stock slide is the start of a long-term plunge like the one Yahoo has suffered. (There was a time, Blodget points out, when Yahoo looked like a must-own, can’t-miss stock, just like Apple does today.)
Blodget’s argument in a nutshell:
* Apple’s recent stock drop is not the result of some giant Wall Street conspiracy and stock manipulation; it is the market’s legitimate reaction to uncertainty.
* Apple’s growth will slow over the next few years.
* Apple will have to introduce new iPhones and iPads at lower price points.
* Apple’s margins will contract.
* Apple’s stock will likely float between $400 and $700 for the next few years. (Right now it’s at $505, down from just over $700 a few months ago.)
Could Apple introduce something huge and see its stock go surging to $1,000? Yes. But it could also go in the other direction, Blodget says.
“It may be that the new Apple will be just as astounding a company as the old Apple–that all the Apple doubters will soon be shamed and the stock will blast off to the moon again. That’s certainly possible.
“And it’s possible that Apple will go through a multi-year period of “consolidation,” in which the stock trades sideways in a big trading range. Google did that for years. Amazon did that for years. Microsoft has done that for 12 years. All of those stocks were ‘must-own’ story stocks in their day. It happens all the time.
“But it’s also possible, I am sorry to say, that Apple is in the first stages of a Yahoo-like decline.”
That’s strong stuff. We’ll get a better idea next week when Apple reports its earnings for the holiday quarter. My take: Unless Apple blows out the expectations, the stock will come under even more pressure. And if Apple falls short in any way? Watch out below.
Image courtesy of Reuters.