Is Apple Stock a Buy or a Bye at $400?

A few hours into trading yesterday, shares of Apple (NASDAQ: AAPL  ) fell below $400. They're doing the same today.

Apple stock has been here before. The shares traded as low as $385.10 when it bottomed out two months ago. However, seeing the world's largest consumer tech company weave over and under $400 has to be difficult to watch.

For starters, outside of that April dip, investors have to go all the way back to late 2011 to find the last time that Apple stock broke below $400. Apple is selling far more iPhones and iPads than it was back then. Does that make this the mother of all buying opportunities?

Not so fast.

From a valuation perspective, Apple is historically cheap at 10 times this year's projected profitability. The fundamentals aren't as kind. Apple's margins continue to contract, and Wall Street's bracing for declining net income on modest top-line growth during the latter half of fiscal 2013. 

Apple isn't as fresh as it used to be, and that's turning off investors and early adopters. Apple is no longer a can't-miss tech darling after seeing its stock plunge 43% since peaking the morning that the iPhone 5 hit the market. Consumers are also turning away, and we see that in wireless carriers pointing out that half of their iPhone sales earlier this year were for the cheaper iPhone 4 and iPhone 4S models. Apple's shrinking average selling price on iPhones bears that out.

Apple's losing its cool, and Apple stock is no longer hot.

How bad are things? Well, BlackBerry (NASDAQ: BBRY  ) reports quarterly results on Friday. Analysts see revenue soaring 23%. Apple is now a couple of quarters removed from its last quarter of double-digit top-line growth, and analysts don't see that resuming for another year. 

Apple's posting year-over-year declines in profitability. BlackBerry is just returning to profitability, reversing a year-ago loss.

Apple may not be alone here. The world's leading smartphone seller -- Samsung -- has been weak on reports that its Galaxy S4 handset isn't meeting the company's initial targets. On Friday we'll hear form BlackBerry, and it wouldn't exactly be a shock if guidance isn't up to snuff. 

The industry's tiring, at the worst possible moment. It's not just Cupertino.

However, given Apple's history as an innovator, this may also be the time for the forgotten tech giant to break out its next bar-raising move. It's why it's hard to sell Apple here, even as it has earned every downtick on the way down. 

When Apple's back is against the wall -- and that's exactly where it is these days -- history has shown that's the best time to be a buyer. 

Dump Apple at your own risk.

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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 June 25, 2013, at 2:52 PM, peto3 wrote:

    Hey Ricky - do you enjoy throwing up in your mouth? Just wondering ...

  • Report this Comment On June 25, 2013, at 2:56 PM, Oril wrote:

    You are still not doing your homework Rick.

    Blackberry is not just reversing its year ago loss, it did that a quarter ago. A lot of good things have happened in the company this quarter which will be released to the public on Friday BEFORE markets open. Meanwhile the stock is still climbing while your darling Apple continues into the tank.

    It's not too late, are you sure you are not ready to amend your call for it to close Friday lower than it did the previous week?

  • Report this Comment On June 28, 2013, at 2:44 PM, user5701 wrote:

    ::ahem, clears throat::

    What were you saying about Blackberry again?

    BlackBerry shares plunge 25% on disappointing earnings - http://www.usatoday.com/story/tech/2013/06/28/blackberry-fir...

    BlackBerry Shares Drop By A Quarter After Losing $85 Million - http://www.forbes.com/sites/parmyolson/2013/06/28/blackberry...

    There are dozens more where those came from...

  • Report this Comment On September 27, 2013, at 1:55 PM, user5701 wrote:

    It's fun to look back on articles like this, especially with the latest news on Blackberry losing a billion dollars and barely on life support while trying to find somebody to take it over. Maybe HP will buy it, just to kill it? I hear they have a habit of that.

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