Recent analysis From Apple (Nasdaq:AAPL) Seeking Alpha concluded with a momentum paper, not an average regression paper. At the time of publication, I encouraged my subscribers to follow me in short selling stocks. I will use this article as my counterpoint and explain why I am shorting the AAPL again.
The last time AAPL was sold was just before the peak of the pre-corona market. Some can say I’m lucky with my timing and my new shorts lack a new catalyst for the pending pandemic. Fair enough, but before firing me, consider my reasons for the pending Apple withdrawal.
Apple is at war
My previous AAPL fragment We relied in part on misinformation about the severity of SARS-CoV-19 (referred to as 2019-nCoV at the time of writing) and its impact on Apple’s supply chain. Much analysis of the Apple investor pattern has found that Apple investors are overly optimistic about the bad news. In other words, they tend to discount the downside of potential negative catalysts and only drop stocks when things don’t clearly change the way you want.
There is currently no previous atmosphere of “It’s just the flu” when it comes to COVID-19, but there is a similar vibe when it comes to app store opposition to developers. On Facebook (Nasdaq:FB) For Epic Games, developers feel they are being abused by Apple, citing unfair treatment and excessive transaction fees. Of course, Apple claims that the 30% transaction fee is fair and not new, which has been stable since the launch of the App Store.
If you’re confused as to why so many companies are suddenly complaining about standards that are maintained over long periods of time, take a look at Apple’s recent shift in business deals from product to service. Apple previously served as a platform for businesses to launch and deploy services, but now it is competing directly with many customers. Company Subscription bundling App Store clients can effectively lower sales while still making up 30%.
Apple’s clear bias
Simply put, Apple is competing with its competitors while maintaining ownership of the platform. That is, if Apple Service A and External Service B compete directly through the App Store, and the service is priced the same and is equally popular, then Apple will collect 100% of Service A’s revenue and 30% of Service B’s revenue This is a fair competitive environment Does not explain.
Developers are, of course, embarrassed. Like the SARS-CoV-19 in February, this is a problem that doesn’t go away and grows in size. The more upset developers are across Apple, the more privileges they need to boycott or change App Store policies effectively. Apple needs a vaccine.
No winning strategy
Unfortunately, 30% of Apple’s revenue comes from App Store distributions, and almost any change appeasing developers will have an impact on Apple’s revenue. The best scenario is for Apple to reduce transaction fees by 30%. Worse, a shift in business models and legal battles ending with an all-out boycott of the App Store are driving developers (and customers) to other distribution platforms. In any scenario, Apple appears to have lost financial figures. Decreased profits and profits are reflected in the earnings report, and stocks are trading at all-time highs, overboughts and dot-com valuations. Now is not the time to ignore the possibility of a decline in Apple’s share price.
As performance drives the stock price, this issue could indicate a temporary peak in Apple’s stock price. The timing is consistent with Apple’s seasonal withdrawal in September and the general seasonal pattern of the market. I have to remind my readers that I’m not an Apple bear, but if I think a downtrend is coming, I should write a warning about this stock. Countless articles about Apple in the past.
From a historical point of view, Apple’s worst month (read: most likely underperforming) is September.
(Source: Damon Verial; Tiingo’s data)
Therefore, I am making such a warning. Despite the AAPL hitting a new high, now is not the time to rejoice. Apple’s war against App Store developers won’t end with Apple as a winner, at least in the short term.
Please follow me when selling this stock. Here are the plays and technical aspects that back up the play I recommended on Monday. On the Wednesday of writing, I think the following options strategy is still in effect.
The flow of funds in AAPL is weakening and it is usually time to open a short position. A typical withdrawal would make us between $110 and $115. Keys are passed down the support level of $125.
We also have an open gap at around $118. This looks like an area gap to me. The fullback target engages with the idea that this is an area gap, allowing you to fill the gap during the holding period.
Of course, these technical parts are meant to support seasonal play. My goal is to hold it during September when the decline is expected. It’s a simple seasonal deal with a holding period of one month.
I want to sell the phone. But you can also go with a long foot. Right now I feel put options are a bit expensive (put options for most tech stocks are now).
$132.50 call sale on September 18th.
Buy a $130 put on January 15th.
Selling a call carries an infinite risk of upside, whereas buying a put option allows you to risk only the debit on the put option. Choose the one more suitable for your risk tolerance.
Profit disclosure Revenue trading newsletter (with live chat). We make predictions based on statistics, probabilities and back tests. It’s a good idea to trade with an options strategy to create a play with high rewards and low risk. We are 89% accuracy For the prediction of 2019.
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expose: I/we are short AAPL. I wrote this article myself and express my opinion. I am not getting rewarded for it (except Seeking Alpha). There is no business relationship with the company holding the shares mentioned in this article.