Apple Is Down ~3% After The Celeb Nude Scandal, And Pacific Crest Tells Everyone To Sell Shares
Rough times for Apple, suddenly.
The stock is down ~3% today, heading back towards $100.
There's two reasons for the stock to be tanking: The iCloud photo scandal, and a note from Pacific Crest analyst Andy Hargreaves telling investors to sell Apple shares.
Last week, the company was flying high as anticipation built for the iPhone 6, and the iWatch, which are expected to be announced next week.
Then, it all came to a screeching halt over the weekend, when nude photos of celebrities hit the web. Apple's weak security on iCloud was blamed for the photos hitting the web.
The timing couldn't be worse. Apple is about to roll out a new mobile payments feature, as well as health tracking data tied to your iPhone. If Apple can't be trusted with photos, can it be trusted with banking data and health data?
On the back of the nude photo scandal, Pacific Crest's Hargreaves says, "We recommend taking profits in Apple." That is, if you've gained some upside from Apple shooting to $100+, then now is the time to lock in that upside with a share sale.
Here's a key bit from Hargreaves:
We recommend investors begin to take profits in AAPL. The stock is currently trading above our $100 price target and we believe prices in the vast majority of potential upside from the iPhone 6 product cycle. We are maintaining our Outperform rating until we see detail on new products and services at Apple's Sept. 9 event. However, if the announced products and services do not suggest massive incremental profit opportunities, we are likely to downgrade our rating for AAPL.
And here's another bit. We bolded the most important sentence. Note that he says investors should hang on to some Apple, just in case.
We expect a new payment partnership and entrance into the wearables category to be Apple's most significant new product launches in the next six months. Based on the work we have done, we do not expect either new segment to drive incremental profits that are meaningful at Apple's scale in the near to medium term. However, we are open to being wrong on this and believe investor confidence in the iPhone 6 cycle will support the stock through the coming event. Consequently, we recommend holding some position in AAPL through the Sept. 9 event in the hope of getting clarifying detail on the profit potential of new products and services.