Will Apple Make It to $500?

Having bounced nicely off their recent low below $400 per share, Apple (NASDAQ: AAPL  ) shares have been heading higher ever since. The question that investors now want answered is whether the stock can reach $500 and beyond anytime soon. While competition for the iPhone from Google (NASDAQ: GOOGL  ) Android devices and for the iPad from Microsoft, particularly given the recent news that Microsoft may be acquiring Nook Media from Barnes & Noble, are factors, the single biggest threat to Apple's race to $500 is the broader market. If the market can avoid a correction, Apple has a chance. If not, it's likely to put the next century mark on hold for at least a few months.

Short-term headwinds
In the immediate term, Apple is facing some real challenges that are primarily a product of timing. In the last earnings call, CEO Tim Cook alluded to several new products that will come out of Cupertino "this fall and beyond." In the interim, Samsung is expected to roll out several new versions of the Galaxy S4 and launch its own operating system later this summer. You should also expect to see new smartphone offerings from Nokia (NYSE: NOK  ) , which recently made clear that it's sticking with Windows as long as CEO Stephen Elop is at the helm. Finally, with BlackBerry (NASDAQ: BBRY  ) bringing the Q10 to market, Apple is waiting on the sidelines while all of its competitors push ahead. The slow product cycle is one of the chief complaints some have with the iPhone maker.

Hopes are waning that Apple might accelerate its product cycle to match its competitors, as mounting evidence comes in that fall really does mean fall, and Android, Windows, and BlackBerry are likely to get the summer to themselves. Apple supplier Pegatron is rumored to be building its labor force but up to 40%, but slowly over the next several months. In addition, LCD-maker Sharp is said to have plans to ramp up production, but not until June. What all of this suggests is that a surprise early release is highly unlikely.

The biggest risk to $500
As anyone who follows the economy knows, the stock market has been on a tear of late, hitting progressively new highs. While the earnings news for the quarter has been solid, the run-up in the equity markets has been largely attributed to the continuing action of the Federal Reserve. There is a great concern that when the Fed removes its support from the financial markets, the house of cards that has been created may tumble, taking the major indexes with it.

Leaving such a severe outcome aside, the stock market is due for a healthy correction if it's going to keep running higher. When that happens, it's unlikely that Apple will be able to remain completely unaffected; you should expect to see shares trade lower as a result of any real correction. If the market doesn't correct, or if it can do so in an unusually orderly manner, Apple should be able to reach $500. If a decline occurs, don't expect to see a five-handle on the stock for several months.

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 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.


Read/Post Comments (13) | Recommend This Article (14)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 12, 2013, at 7:34 PM, HelpIsHere wrote:

    Who would ever care if Apple could get to $ 500?? That would just mean that Apple blew $ 60 billion getting it there, a total waste of time.

  • Report this Comment On May 12, 2013, at 7:52 PM, Chippy55 wrote:

    Oh bah-ruther, and then we'll hear the talking heads quoting the price every 5 minutes and telling us ad nauseum whether it's above or below $500, every 5 minutes, and don't forget, it's the largest market cap stock, every 5 minutes. Cook said the Fall or I believe he mentioned 1st Q of 2014, so Apple stock holders are going to do what? Cross their fingers and keep shorting the competitors stock?

  • Report this Comment On May 12, 2013, at 8:14 PM, Jjkiam wrote:

    Well we might collect the dividend while waiting! Then again as Apple "wastes" 60b buying back it's stock as the largest buy side competitor in the market, maybe we ought to bail ESP before Apple begins it's introductions of new products with IOS7 in June and new gadgets that obviously will fail. And we might as well write off the 400+ stores that drive consumer satisfaction and retention! Yea clearly Apple is headed down the proverbial toilet!

  • Report this Comment On May 12, 2013, at 8:24 PM, DanManners wrote:

    I heard several analysts mention that Apple could drop back to the 380 level. Resistance also was mentioned in the 460s.

    Apple has tested 5 times since last fall and failed each time to go lower. This time could be the last. But I see Apple selling off now and unless it holds 429 level, I think we see a retest of the years low and maybe lower.

    I believe the buybacks and increased dividend help try to put a floor in the stock, but will buyers step up to a stock that is still looking at another terrible quarter and no new products coming for quite awhile. It could be almost half a year more till we get a new product.

    A big selloff will drop most stocks. Apple might hold a certain level and that would be a good sign. Life if the market sold off 1400 and Apple would go below 360 and come right back. Or not go below at all.

    The closer the fall gets here and the markets condition will dictate the level Apple goes too. If the 5s was well received and first week sales were 10 million, we could see 500 and higher. If good news comes out and there is high hopes again, 600 will come fast. It is all possible but for now and until at least the event in June, we trade at these levels!

  • Report this Comment On May 12, 2013, at 10:23 PM, jelp2 wrote:

    Hey remember last fall when the "Apple will hit $1111" was flying around.... now Apple can't even hit 1/2 of that... I just feel sorry for the "investors" who bought in at $700 listening to that drivel.

  • Report this Comment On May 12, 2013, at 10:45 PM, dwilh51183 wrote:

    REALLY MOTLEY FOOL? ISN'T THIS A STUPID QUESTION? AAPL DECIDES WEATHER AAPL HITS 500, 600, 700 ANYTIME SOON. DON'T YOU REALIZE THE BUYING PRESSURE OF 58 BILLION? HOW MUCH DOES 1 BILLION BUY ? WHAT IF AAPL INTRODUCES A CHEAPER IPHONE OR 2 FOR UNDERDEVELOPED NATION? WHAT IF AAPL SIGNS UP CHINA MOBILE? WHAT IF APPLE IPHONE 5S OR IPHONE-PRO SELLS RECORD NUMBERS OF PHONES IN USA, LIKE 60 MILLION IN ONE QUARTER , WHICH I SEE HAPPENING ...SO IT IS TIME FOR AAPL GOOD NEWS. YOU WRITERS HAVE SCARED THE STUPID PEOPLE OUT OF THE STOCK, BUT NOW ITS TIME TO BUY BUY BUY AAPL. UP,UP UP I'LL GIVE YOU 58 BILLION REASONS WHY EVERYONE SHOULD OWN THIS STOCK.ANY GOOD NEWS AND $900.00 HERE WE COME AND SOON. GO AAPL

  • Report this Comment On May 12, 2013, at 10:53 PM, k1moops wrote:

    Like Ronald Reagan's grudge fight against inflation, Apple's grudge fight is against investor & trader influence. Inflation could destroy nations, investor & trader greed absolutely destroy companies. Look at BBRY, investor & trader greed had completely turned BBRY into a purely speculative stock unable to be free of obscene stock manipulations. BBRY's sole purpose is to puppeteer irrational speculative long and short gains resembling a rugby match without a rugby ball. Look at the ridiculously high cash in BBRY's market capital. BBRY is no longer a tech company competing, but a toy puppet of a stock which speculators play both long and short for very volatile and uncontrollable stock movements. BBRY's stock price has long been disconnected to the company's operations and performances.

  • Report this Comment On May 12, 2013, at 10:55 PM, dwilh51183 wrote:

    Apple's not going down much further - if you had any brains you would know that. Yeah there's 2 - 3 dudes who say aapl is going to 425, but 35 analysts say aapl is going to $650. it's time for Apple to roar.. 41 million shorts have to cover. AAPL SHOULD PULL THE TRIGGER AND PLACE A "BUY ORDER " AT THE MARKET...TO BUY 10 BILLION WORTH RIGHT NOW! AND SQUEEZE 20 MILLION SHORT SHARES. AAPL RALLIED $45.00 TODAY ON one of it's biggest up days in 6 months.analysts say theres more upside to come as sales for iPhone Pro 5-s are sold out everywhere and up, up, up aapl goes. AAPL SHOULD BE TRADING AT $1050.00 A SHARE RIGHT NOW. 47BILLION, 55 BILLION , AND 43 BILLION IN SALES THE LAST 3 QUARTERS .Wake up America....AAPL is phenomenal

  • Report this Comment On May 12, 2013, at 11:11 PM, gettmoney wrote:

    wow somebody upset dwilh51183...long bbry

  • Report this Comment On May 12, 2013, at 11:15 PM, k1moops wrote:

    aapl >= $700 places an undue burden for Apple to sell 2x its current sales and profits, $700 is a distinction level disaster to Apple doomed to fall like a house of cards. Apple management did a Herculean job in putting out this stock fiasco otherwise Apple would not be able to operate as a company without destructive investor influence, and strategic projects like DoD would have stopped dead in its track, and China Mobile would just walk away from the table, instead now closer to inking a deal that could boost annual iPhone sales by 300 million. Apple's strategy of using massive capital to secure lower price guaranteed components such as smartphone and tablet screens had worked to Apple's advantage for a while, but the result in making Samsung a monster frenemy benefiting more from the Apple partnership must now be dealt with differently cutting into Apple's margin and supply chain complexity. Apple's old strength was in redefining small mass merchandises and sell huge quantities at high profits, this is the cream in consumerism. Smartphones benefit carriers more in the long run, iPad is carrier independent and this is where the war will be won by Apple as it redesign iPads as wearable devices using Siri. There is no reason why a iPad cannot be the size of a headphone or necklace using Siri with an optional paper thin scrollable display screen.

  • Report this Comment On May 12, 2013, at 11:19 PM, k1moops wrote:

    aapl must not go above $550 or below $350 to operate optimally free of investor greed.

  • Report this Comment On May 12, 2013, at 11:48 PM, ConstableOdo wrote:

    I feel very confident Apple should get to $500 before the year's end. Still, it's a far cry from last year's analyst calls of nearly a $1000 a share. Google is making Apple shareholders look absolutely pathetic. Here's a stock that has no buybacks or dividends and it just keeps soaring without all the world worrying about Google collapsing. Google's share price is getting just shy of $1000 while Apple is struggling to stay above $450. I guess the people who manage Google know how to keep its value up for shareholders.

    At least I'm happy with my increased Apple dividends even though the stock may not be going up anytime soon, if ever. I'm hoping all of Apple's recent financial acrobats might make the stock considerably less volatile, but when it comes to Apple's share price you just never know what's going to happen from one day to the next.

  • Report this Comment On May 13, 2013, at 2:08 PM, speechisntfree wrote:

    I always get a kick out of listening to the "samboys" bash the "fanboys".....

    the lot of you are jokes.

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