Apple Hits $600… 6 Reasons There May Be No Upside

5/6/14 10:20AM EST

Apple Hits 600 6 Reasons There May Be No Upside Apple Hits $600... 6 Reasons There May Be No Upside

Image via Linda Moon/Shutterstock

Apple Inc. (NASDAQ:AAPL) stock hit above $600 per share for the first time in quite a while on Monday just before the market closed on Wall Street. The company’s shareholders will be happy with the recovery, but there’s probably quite a few getting nervous about the company’s future.

There’s no telling here Apple stock will go in 2014, but now’s a good time to have a look at what drove the stock to $600, and what might kept it around that level for the rest of the year.  Here’s six reasons Apple may not grow in value through the rest of 2014.

Geoffrey Gundlach Says So

Apple shares began to crash in September of 2012, and the last time they were above $600 was November of that year. One investor was ahead of the pack in his diagnosis of Apple. Geoffrey Gundlach, manager of the DoubleLine Total Return Bond Fund, predicted that Apple shares would begin to lose value that year, and he was right.

As the Cupertino company’s stock headed toward the $600 barrier once again, Gundlach told CNBC that he doesn’t think Apple has the strength to head higher this year, particularly since the only thing that drove the company’s shares above $600 was the financial intervention of the board.

Shareholder Manipulation Can’t Last Forever

Apple Inc. (NASDAQ:AAPL), as Gundlach correctly pointed out, has risen on the back of a series of shareholder incentive deals. The company is now paying a healthy dividend, buying back an absurd amount of stock and organizing a split that may make Apple stock ownership available to more retail investors. That offers huge incentives for shareholders to hold onto the stock, but it can’t last forever, and it doesn’t add fundamental value to the company.

iWatch Is More Difficult Than Previous Hardware

The iWatch is apparently not going to be sold as a smart watch like the others, it’s going to concentrate on offering a fitness solution to users. Assuming Apple is planning on releasing the product, it’s likely that it will face hurdles more like the original iPhone than any product since. As with the iPhone Apple will have to get people used to the idea, and that may take quite a while.

Apple As A Service Company Is A Rumor Not A Fact

In combination with the iWatch, Apple is said to be making another big change in 2014. The company is apparently headed towards offering more services. E-payments and healthcare are the ones most mentioned, and the ones that seem to be exciting investors. Neither of them is confirmed, however, and the amount of software and service businesses that Apple has promised and failed to follow through on should give anyone pause.

Today’s $600 Isn’t The Same As 2012′s

Of course there’s a certain amount of inflation to account for, but that’s not what makes the price of Apple shares today and those in 2012 wrong to directly compare. An Apple share today is worth a bigger part of the company than one in 2012 was. When Apple shares hit $600 for the first time, way back in March 2012, the company was worth $559 billion. On Tuesday morning, with shares at $600 once again, the company is worth $519 billion.

The Market Simply Isn’t Predictable

Apple suffered from serious issues of unpredictability when its stock fell from above $700 to below $500. The market is simply not that easy to take account of, and those that try usually end up losing money. Timing an Apple recovery is not easy, and most investors should stay away from it. With the momentum bust of 2014 still weighing on tech stocks, there may be more risks in Apple than most.

Disclosure: Author represents that he has no position in any stocks mentioned in this article at the time this article was submitted.

 
 

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