Among the major indexes, the Nasdaq
If you’re disappointed by the results, don’t be. While Wall Street was hoping for more iPhone sales, the opening weekend shipments of iPhones were largely sold out, and the larger issue appears to be on the supply side. There have been widespread reports that new display technologies have slowed the rapid build needed to meet pre-order demands.
However, while concerns about the iPhone’s launch weekend may have been exaggerated today, that’s not uncommon in the technology space. Plenty of companies see outsized pops and drops as news trickles out and investors overreact. Let’s look at a couple of tech companies in the news today, and see whether their pops and drops make sense.
Soaring: Rambus a legal victor?
Dropping: Facebook swoons
Is the sell-off deserved? From the perspective of the article, I’d say the answer is a definite "no." The Barron’s article says Facebook shares are worth "perhaps only $15." That’s hardly a concrete number, and one that comes with little justification aside from that being the lowest price target on Wall Street.
One reason that the article could be having such an outsized reaction is it correctly cites Facebook’s market capitalization at $61 billion, more than the $45 billion figure quoted on most financial sites. The discrepancy in valuation comes because sites are incorrectly counting Facebook’s diluted share count from its vast option grants. With many investors having an incorrect gauge of just how much they’re paying for Facebook, it looks even more expensive when factoring in its correct share count.
While I don’t feel that the article offers a compelling enough bear call on Facebook to move the shares, there is little doubt the company remains expensive. With continuing lock-ups on Facebook shares expiring in coming months, and its growth decelerating, I’ll be staying away from the company at today’s prices.
Top notch advice
While investors might have been disappointed by iPhone sales today, there’s no denying the iPhone 5 will break sales records across the holidays. The stakes are high, and the opportunity for Apple is huge, so to help investors understand this epic Apple event, we've just released an exclusive update dedicated to the iPhone 5 launch. By picking up a copy of our premium research report on Apple, you'll learn everything you need to know about the launch, and receive ongoing guidance as key news hits. Claim your copy today by clicking here now.