German Bank Predicts Apple Stock Tumbles Over 50% As Shares Roundtrip To $60

Tyler Durden's picture

When it comes to the sellside putting up ludicrous upside price targets on any stock, and especially cult-favorite Apple, the media world is all smiles: after all, with AAPL once again the defining stock of the Nasdaq, and on many low volume days determining how the entire S&P trades, what can go wrong if everyone is invested in one company (and according to Goldman, most hedge funds already are). However, dare to suggest that the price of a company whose forward earnings multiple has more than doubled in the past two years, is massively overbought and prepare to suffer the full wrath of the Apple Borg collective, also known by the NSA as "zombies who are paying customers."

Which is why few if any ever dare to go against the wisdom, or madness, of the crowd. After all, there is safety in numbers, and if one analyst is wrong (on Apple or anything else for that matter) they will all be wrong, so there will be no individual blame (one of the main reasons why nobody has gone to prison over the first Great Financial Crisis).

Yet one bank which dared to go dramatically against the grain is Germany's Berenberg Bank, which earlier today forecast that AAPL's price will crash to $60, a plunge of more than 50%, due to two things: the law of large numbers, and over-reliance on one single product as the iPhone accounts for 85% of AAPL's operating profit. Putting this in perspective, the vast majority of sellside analysts have a price target well over $100. In fact there are as of this moment only 3 double digit AAPL price targets.

The highest price targets:

 

And the lowest ones:

 

Apple Insider obtained a full copy of the note. In it, analyst Adnaan Ahmad writes that Apple relies too heavily on the iPhone for its profits. "Ahmad noted that the iPhone accounts for 70 percent of Apple's revenues, and 85 percent of its operating profit. Simply put, Ahmad believes that the "law of large numbers" will quickly catch up with Apple."

This is hardly news: so what is the driver?

"As this accelerated replacement cycle slows down, iPhone volumes will turn negative in terms of growth," the analyst wrote. "As we have also stated, there is, in our view, a limit to how much share Apple can take at the high-end, and its price premium and recent hike must narrow over time, as it has done in the consumer electronic space (even for Apple's other products — iPod, iPad and Mac)."

What about Google Glass, pardon the Apple Watch?

Ahmad doesn't see much hope on the horizon from the Apple Watch, but he is bullish on the prospect of an Apple-built automobile. The analyst said he believes that Apple should acquire electric-car maker Tesla to give it a foothold in the auto business.

So in the nightmare scenario where Berenberg is right what will that mean for Apple (if not for the Nasdaq and S&P which will suffer an epic collapse with Apple accounting for the bulk of Nasdaq index upside and the bulk of S&P earnings upside)? Well, not that much actually, because all that will happen is that the recent massive multiple expansion which had seen AAPL's forward PE soar to over 15x on speculation and fact of massive stock buybacks, is to revert back to a much more normal level last seen in that long ago summer of... 2013.

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kliguy38's picture

Blasphemy!!  There's a black op site in chicago waiting for your analyst

HedgeAccordingly's picture

wonder how Icahn feels about this? a drop to 60 is not end of world tho.. BTD?

http://hedgeaccordingly.com/2015/01/carl-icahn-talks-his-apple-book-and-...

hal10000's picture

Ichan knows Yellen won't let prices of equities drop so he knows quite well there's a floor.  If Apple were to drop by 50%, aside from the obvious fact that analysts have overpriced the stock for *years* now, it would be illustrating some catastrophic event has happened in the economy because none of Apple's competitors can actually compete with the iPhone.  If there's to be a massive price correction, then the Fed will swoop in so Icahan can sleep well at night and not have to worry his pretty little head.

Actually, why single out Apple?  Every stock price is overpriced by an insane amount...

youngman's picture

I agree the Fed would jump in  and and buy the dip...to save the world in their minds...I would say there are more people that want it to go to a trillion first....its Americas savior...the American idol of a company....

sunny's picture

What a quaint thought.  I'm old enough to remember the phrase, "What is good for General Motors is good for the USA!".  You're suggesting that was is good for AAPL is good for the USA.  No argument.  Curious turn that AAPL is thinking about getting into the car business.  Karma?

twh99's picture

It is simply analyst speech.  They have nothing to talk about so a crazy rumor gets started when Apple has vehicles doing street view mapping.  Look it's an Apple car.  Apple is going to build cars now.  Etc.

It is all crap.  There is absolutely not one shred of hard evidence that Apple is getting into the car business.

It is all the analysts talking in a vacuum.  Probably sucking their drugs of choice.

g speed's picture

That would be the coup of a life time for Musk (to sell Tesla to Apple) 

J S Bach's picture

AAPL will hit $60 when they split the stock again.

maskone909's picture

buying aapl stock is basically selling your soul to the devil.  buying aapl is equivalant to paying your neighbor to spy on you, record everything you do and speak to, and destroying your basic civil liberties.  and people just cant seem to get enough.  in fact, they even encourage their family members to participate.

Babaloo's picture

I'm completely confused by this post.  The stock is already at $130.  How can most sell side analysts have a "target well over $100" - the stocks already well over 100.  WTF?

yogibear's picture

"Berenberg Bank"
Usually
"Berenburg Bank"

What bank is that?

SethDealer's picture

dont put all your apples in one basket

Rainman's picture

haha ... the i- boyz better be planning to stuff a lot of muppet asses with i watches.

Greenspazm's picture

Reggie Middleton must be on the Board of this bank ! They seem to think that company financial data are related to the stock price - how cute.

Greenspazm's picture

some fucker is downvoting all the apple-critical comments on this post

Abbie Normal's picture

probably owns their stock, their product, or works for them in one way or another.

taketheredpill's picture

 

 

Career Risk versus Client Risk...

 

FreeShitter's picture

The i sheep dont wanna hear this.

J Pancreas's picture

Cue the iSheep iamman40 or whatever who only posts bullish statements when an AAPL article gets mentioned.

WTFRLY's picture

like a fart in the wind

Free_Spirit's picture

The iPhone is the biggest pile of designer bling, you can get a high functioning WindowsPhone or Android for about 1/6 of the price, much better build quality, better software, better cameras, less conflicts with other software. Even Apple-enthusiasts are now seeing what this shiny pretty stuff is actually worth and are moving out. Apple needs to reinvent and lead, as they once did, or they'll just die.

adr's picture

Really?

Sony Experia TL Released October 2012

4.5" 1280x720 shatterproof screen 323 ppi, 1 GB RAM 16GB flash memory MicroSD expandable

Dual core 1.5ghz, 13 MP, 4128 x 3096 pixels, autofocus, LED flash camera

vs

iPhone5s released September 2013

4" 1136x640 326 ppi screen that cracks if you look at it wrong

1GB RAM 16/32/64GB flash non expandable, dual core 1.3ghz ARM

8 MP, 3264 x 2448 pixels, autofocus, LED flash camera

 

The iPhone5s was bested by just about every mid to high end phone released a year before it.

bag holder's picture

What Apple has going for it is the "app store ecosystem" (vendor lock-in). Even then, most iOS apps seem to have an Android port these days.

Never been able to stand Apple products myself. Computers with training wheels.

Exponere Mendaces's picture

Nailed it on the head.

I call Apple products "Captured Computing". They only open up a narrow window on what is going on, and god help you if you need to get any deeper than that, especially on their phones. I always thought their obscene profit margin over materials was going to get them eventually, so it doesn't surprise me that their stock price is due a visit from the "Reality Hammer".

Anyway, Android has been a hackers paradise and is only getting better in the sense of new technology and operating systems. I'm looking forward to them getting aggressive and even substituting the baseband with something open-source driven. That would be a true revolution, using software-defined networking.

 

logicalman's picture

I can't imagine paying for a device that completely compromises my privicy to the extent tha ANY cell phone does.

Humans will do anything for 'convenience' it seems.

Never had a cellphone. Not had a TV this century.

Apple laptops are, IMHO, one of the better build qualities you are likely to run across, and you don't have to run Mac OS

My Macbook Pro is set up with MacOS, Windows and Linux as a triple boot.

 

 

wmbz's picture

The APPL cult would sacrifice Granny and their first born on any sign of trouble for their god.

They don't need to buy Tesla, why waste the money? They are just sucking/buying up Tesla's staff.

APPL is an awesome god!

hibou-Owl's picture

the piss poor performance of IOS7, I brought a xiaomi Phone.
I have had several iPhones in the past, xiaomi shits all over Apple.

Much rather Chinese spy on my phone than yanks!

R19's picture

Speaking of which, Bloomberg had Ackerman on AGAIN talking shit about Herbalife. Check out my oh face =X

Chuck Knoblauch's picture

So, put your money into AAPL putz.

FieldingMellish's picture

The only thing that is allowed to collapse are short-funds and PMs. Nice to see another round trip today, courtesy of our pals on Wall Street.

jimijon's picture

This should bring out all the ZH iHaters and Reggie too. As a developer all you people who think a Windows phone or a cheap Android phone competes on quality must be drinking the hard stuff as the IQ of alcholics is lower. Heck just recenly a long time Android fan.. had everything, Sxs from Samsung and Note Xs etc., finally got an iPhone 6+. He hated to admit it, but it was all the little things that were so much better along with the fact that in the Apps department, there was absolutely no competition in quality.

And, I would bet that most Android developer develop on a MacBook. 

I believe that a lof of ZH'ers have a strong jealous streak of anything successful. Meanwhile, the world's money will still flow to the US and keep all prices going up.

cheers

 

saints51's picture

I prefer a pay phone and a beeper. All the other tech is pure garbage and not needed.

bag holder's picture

OSX is Linux with training wheels. Most developers use Macbooks because most developers are exactly as susceptible to peer pressure as the rest of society.

logicalman's picture

My Macbook Pro is set up with MacOS, Windows and Linux as a triple boot.

Can't beat having options.

It's a very well made machine. I've never run across a Windows laptop that is as well put together.

Exponere Mendaces's picture

Someone already proved you were wrong on the price/component standpoint. Now you're trying to say Android devs use Macbooks? Riiiiiiiiight.

I do Android dev on a windows machine, and it is a far sight easier than fucking around with a mac mini or iMac trying to sign security certs to push out a demo to be tested using XCode.

But naturally your little comparison doesn't have any real details, because you're full of shit. Tell you what genuis, try to compile an app under iOS and sharing it with someone via email. You fucking can't. Everything has to go through the Apple mothership, even ad-hoc testing.

In Android I can compile an app, and push the .apk file to someone via email for testing without a bunch of intermediary DRM-related BULLSHIT. That is why iOS is losing, not only on the pricing front.

But, knowing ZH, you'll just come back with your own brand of shit-con-carne, without reading a word I said.

Go fuck yourself.

 

Sweet Cheeks's picture

Exponere Mendaces,
Anyone so sure he is right has no need to resort to attacks with foul language.

 

Exponere Mendaces's picture

Oh, another anointed saint from the bilgepump of ZH commenters.

Go fuck yourself.

 

logicalman's picture

Most scientists love the MacBook Pro.

I'm not a scientist, but see my previous post.

buzzsaw99's picture

from the berenberg site:

Acknowledgement

This site is targeted at, and intended for the use of, European residents. In particular, no offer or invitation is made to any US persons. Products described on this website are registered only in certain jurisdictions. These products have not been registered under the US law, are not offered and may not be sold in the United States or to US citizens and residents, including US institutions, or any other person in any jurisdiction or country where offering or selling such products would be contrary to local law or regulation. By clicking continue I acknowledge that I have read and understood the preceding information.

TheRideNeverEnds's picture

Good call; Apple is only up a little more than 1% today, its basically crashing.  

SillyWabbits's picture

Apples grow on trees.

Trees have roots.

What is the root of Apple’s success?

The products?

The stock?

Apple gets free advertising and promotion by all media.

Samsung for instance gets no such thing.

By Apple rising, indexes also rise.  Like the S&P.

Do people play the indexes?

Is that the root of Apple’s success?

No homey, it’s the shoes!

adr's picture

The biggest problem is the move of US carriers away from the subsidized phone model. Verizon, AT&T, and Sprint all put the iPhone on sale to move inventory. Sprint even dropped their plan $10 a month so the total bill would equal getting a cheaper Android phone. The ads were all iPhone ZERO DOWN, like you were buying a car.

All of a sudden getting three iPhones for your family would cost $90 extra per month as you must now pay $30 a piece per month for two years on top of the regular bill for service. Instead of paying $100 and getting an iPhone you are now using the RentAcenter model of business and paying for the total price plus some in monthly installments.

People are realizing a $99 Motorola G is just as fast and works just as well as an iPhone. In fact up until the iPhone6 just about any Android phone over $150 produced over the last three years was better. Coupled with $40 unlimited pre-paid plans you can save almost $100 a month dumping your iPhone. I bought three MotoG LTE phones for $50 a piece on sale and have a four line pre-paid cell plan for $100 a month with 3.5GB for each phone. Through Verizon the equivalent plan would run almost $250.

The Chinese are dumping iPhones faster than Apple can channel stuff them. There are still millions of unsold iPhone4s and 5s sitting in Chinese cell phone stores. Who is going to pay to take back that inventory?

The iWatch looks terrible and has an asinine interface. LG's new Urbane smartwatch looks like a real watch. All th eother manufacturers can also release more than one model and change at will. Apple will be stuck with the singular iWatch design. Even if it fails spectacularly Apple will still claim it was a success and people just didn't get the brilliance of the product.

The sad part is even if AAPL is cut in half you are still talking about a near 400 billion dollar company, still overvalued by any metric. There are no limits to Wall Street insanity.

 

FieldingMellish's picture

RSI divergent on the weekly, just like the last top a couple of years ago.

Fun Facts's picture

gay ceo launched gay iwatch go figure

Comte d'herblay's picture

In legal sense, yes, but in a common sense, absolutely not.  There is a god and she is pissed as hell that two persons of the same sex have appropriated an institution that is exclusively the enclave of the herteogenes.

Tim Cook is taking it up the ass and that kind of putrifucktion does not beget anything remotely resembling a child. 

logicalman's picture

I doubt his orientation has much to do with business decisions.

Bigots really piss me off.

magne13's picture

I think this analyst is forgetting the fact that stocks have zero to do with fundamentals. Even at 15x Apple looks decent.  How about the nearly $200 billion in cake they have on hand? Once people realize that equities are the new "bank account" then you will see why fundamentals don't matter.  As long as the FED is around stocks will go up, which is also why the FED will never raise rates and here is my proof, first link is on Apple, second link is my rationale for the FED, simply its a balance sheet thing...

https://www.linkedin.com/pulse/debt-apple-sp500-bond-technicals-magne13-...

https://www.linkedin.com/pulse/can-someone-correct-me-i-am-wrong-michael...