At the end of January, I predicted that Apple (NASDAQ: AAPL ) would touch $400 per share before it crossed $500 again. While the stock made a valiant run to $480 in an effort to prove me wrong, it has since shown significant weakness that brought shares within less than a dollar of recent lows during last Friday's trading session. Still trading with a P/E below 10 and looking like a real value, investors are beginning to ask themselves whether the stock will tumble, soar, or stagnate. While there seem to be several catalysts lurking in the shadows, none has pushed to the forefront to take control of the stock's future.
While there is little evidence that either product is imminent, the release of either the iWatch or iTV has been widely rumored and is drawing attention from investors. News of the next-generation iPhone, as well as the release of a cheaper version that will allow the company to make a significant push into the emerging markets, could likewise serve as a positive, but the timing of each of these events is not likely to drive the stock at present. There's also some concern that the iPhone 5S -- if Apple follows its regular pattern -- could be a letdown.
The most plausible positive is an announcement from Cupertino of an initiative to put more cash back into the hands of Apple shareholders. Ever since the shareholder lawsuit leading up to the last shareholder meeting, the issue has been on the minds of many investors. Apple's reported $137 billion in cash could make shares more attractive if some of that amount began to flow.
Unfortunately for Apple, the number of potential negative catalysts is probably longer than the positive ones. Facebook's (NASDAQ: FB ) announcement of Facebook Home has the potential to pressure Apple sales, as the platform exists solely on Google (NASDAQ: GOOGL ) Android devices. In addition to integrating the Facebook experience more fully into the phone, Facebook Home apparently streamlines the operation of Android in such a way as to make it more user-friendly, an area Apple has historically commanded. If evidence emerges that Facebook Home is gaining traction, expect to see further concerns for Apple.
Another Android based threat is the arrival of the Samsung Galaxy S4. The new smartphone from the world's largest manufacturer of wireless phones is definitely likely to put pressure on Apple. While Apple reclaimed the top spot over the Galaxy S III after the iPhone 5 was released, Samsung had temporarily beaten Apple on its home turf. Samsung continues to make inroads, taking aim at Apple in various ways -- another new development is the new retail locations that Samsung is introducing.
Probably the biggest risk factor for Apple shares is the direction of the overall market. While each of the major indexes has been flirting with progressively higher all-time highs, a correction could easily pull Apple shares below $400. The company's earnings release at the end of this month has dramatic potential as well, not because the numbers won't be strong, but because Apple shares tend to react poorly to anything other than perfection -- a mere 47 million iPhone 5s sold.
With this marking the first earnings release since Apple shifted to "range guidance," the Street is less certain what to expect. Any perceived weakness will probably be punished, making $400 per share quite reachable. Ultimately, the stock still carries strong fundamentals at a very attractive price, but near-term forces are a matter of concern. I maintain the belief that you'll see $400 before $500.
There's no doubt that Apple is at the center of technology's largest revolution ever and that longtime shareholders have been handsomely rewarded, with more than 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.