The Apple iPod Hype Poll

[Lonyo]

Originally posted by: JS80

Originally posted by: ElFenix
so you're going to short it and hedge with a put option?

I was planning on buying put options a day before they release earnings, with the options expiring the same week. Hmmm...I thought the iPod hype was slowing down but apparently not. My rationale was that everyone who would ever purchase an mp3 device already bought one of the 5 iPods that have already come out. The PE ratio is still 48 and their core business unit which was thought to be the Macintosh is non-existant. They seem vulnerable however because of their lack of diversification; once iPod sales slow down their stock will no doubt be punished hard.

January is expected to see the release of the Pentium-M based laptops so I wouldn't ocunt out their PC business yet, it fact we may see a lot of change in the first few months of 2006.

 

[Viper GTS]

There are plenty of people who have yet to buy MP3 players.

I haven't found one yet that has compelled me to buy.

Plus with HD based players inevitably failing, there is plenty of market for 2nd, 3rd, etc. purchases.

Viper GTS

 

[vi edit]

What strike price did you(or would you) buy that January put at?

 

[arod]

i personally like creatives ui better than apples but am getting an ipod video over the new vision M because of the software pacakge (creative never has come out with a good software pacakge... then again i dont really like itunes either but its lightyears ahead of creative)

 

[skimple]

So you are making the assumption that a rise in iPod sales is already factored into the stock price, and the price will drop once earnings are released? Very risky indeed. Have you considered other factors on earnings like the huge spike is petroleum last quarter (shipping costs)? Or the fact that Apple is changing the pricing model on iTunes indicates there is a problem with the iTunes business model?

Although I am a conservative investor, I don't think you want to base your decision solely on how you think sales of a single product are running.

 

[bleeb]

i think due to the relatively expensive prices for the iPod and each successive generation of iPod, people will not want to continue to shell out money when they already have an older model.

iPods have bad interfaces, poor battery lives, and poor music sync system, I don't see how they will continue to have dominance in the mp3/multimedia player market.

In summary, I wouldn't purchase apple stock just yet. Or in your case, exercise your options after they release the financials.

 

[randomlinh]

i really hope you don't base anything on a forums poll options.. heh.

 

[JS80]

Originally posted by: vi_edit
What strike price did you(or would you) buy that January put at?

I would purchase at 5 below market price (strike price). My target price per option is 0.15 based on Dec 70 puts.

Originally posted by: skimple
So you are making the assumption that a rise in iPod sales is already factored into the stock price, and the price will drop once earnings are released? Very risky indeed. Have you considered other factors on earnings like the huge spike is petroleum last quarter (shipping costs)? Or the fact that Apple is changing the pricing model on iTunes indicates there is a problem with the iTunes business model?

Although I am a conservative investor, I don't think you want to base your decision solely on how you think sales of a single product are running.

I think it's fair to assume an overly estimated earnings increase being priced into the current stock price considering the PE ratio is approaching 50. If Apple does not "exceed" analyst estimates the stock will get hammered - mark my words.

I did consider oil prices affecting freight costs, but if you follow the oil futures market you can see that oil prices have fallen and are not hitting new highs; also component costs have fallen to offset any increases in oil costs. I am ignoring their iTunes business unit because quite frankly I don't think they make too much off that.

 

[JS80]

Originally posted by: randomlinh
i really hope you don't base anything on a forums poll options.. heh.

A good investor uses ALL information available to him.

Peter Lynch, the long time head of the Fidelity Magellan Fund would buy pantyhose for her wife to pass out to her friends to see if he should invest in the company.

 

[vi edit]

In order for you to break even, the stock would have to drop the $5 per share to get you down to your strike price, and then another $.15 per share to make up the option premium. Then you have to factor in your option commission and your per-contract charge to purchase. And then if you actually exercise that option, you are going to have an exercise option commission more than likely.

Those could add up to be $50 or so.

On a 100 share contract, the stock would have to drop almost $7.00 a share for you to make any money off of it. And then you still have to pay your taxes on it.

 

[speg]

Apple just signed deals with the TV networks. There will be more annoucements at MacWorld (January). Apple is releasing MacTel's next year. All those people that have now bought ipods? Their next PC's might just be the new MacTels.

APPL ++

 

[JS80]

Originally posted by: vi_edit
In order for you to break even, the stock would have to drop the $5 per share to get you down to your strike price, and then another $.15 per share to make up the option premium. Then you have to factor in your option commission and your per-contract charge to purchase. And then if you actually exercise that option, you are going to have an exercise option commission more than likely.

Those could add up to be $50 or so.

On a 100 share contract, the stock would have to drop almost $7.00 a share for you to make any money off of it. And then you still have to pay your taxes on it.

I'm hoping the stock goes to 80, buy 75 puts for ~0.15, stock drops 10 points, 5/0.15=33 times increase. A drop from 80 to 70 is only a 12.5% drop, which is very possible. Ebay last year dropped 20% when they warned they would miss by by a penny. My investment in this will be limited to $500-1000.

Originally posted by: speg
Apple just signed deals with the TV networks. There will be more annoucements at MacWorld (January). Apple is releasing MacTel's next year. All those people that have now bought ipods? Their next PC's might just be the new MacTels.

APPL ++

It's AAPL. The revenues from the TV espisode DLs is negligible for this quarter. Most likely they are taking a loss on it right now to develop the network, and will probably not turn a profit on it for a while.

 

[JS80]

Originally posted by: JS80
Bump for more opinions!

 

[pontifex]

Originally posted by: deathkoba
What the hell are you talking about? Just get one and you'll see what you've been missing out on.

he's talking about buying stock, not an ipod.
yeah, buy one and see how much you overpaid for a piece of garbage that will be ruined within a year.

 

[ponyo]

I thought the iPod craze would die down and Apple stock would come back down to earth. Well that was well over a year ago and I sold all my shares at $55 presplit price back then or $27.50 postsplit. I'm disappointed I sold early but I bought it for $14 presplit or $7 post so I don't feel bad. Profit is profit and almost 400% return isn't bad. Plus I bought some AMD at $14.75 with the proceed and AMD is up nicely since so it wasn't a terrible trade.

Thing about Wall Street is that they love hot product companies and that love affair can last lot longer than most people think. But like most love, it usually ends miserably. That's the unfortunate byproduct of the herd mentality. More than likely people will be disappointed with the earnings. Wall Street has always been buy on the rumor and sell on the news. With any hot stock, people's expectation always get out of line and someone is always disappointed with the numbers no matter how good.

Whether shorting or buying puts before AAPL's earning is good idea or not depends on lot of things. Personally I wouldn't play the game. I would much rather bet on red or black. About the similar odds and more fun and more comps. But if I was to play I would watch closely about 2-3 weeks before the earnings and see if there is any big earnings run. If there is and the stock price has risen alot, I would short it right before earnings that day. If it has not and the stock price has fallen good bit, I wouldn't touch it. If it has flatlined, I wouldn't touch it although I would lean towards shorting it. This said, options are different matter and you have to factor in cost of buying certain strike with time decay and it can get more complicated.

I think the smart way to play the eventual Apple downfall is to wait until the chart breaks. The stock is still in the uptrend and I don't like to get in front of a moving train. No one is smart enough to pick the exact top. Only the lucky ones do. Once the chart breaks, you'll have plenty chances to get it to short or buy puts. Just like people had plenty of chances to ride the train up, you'll get plenty of chances to ride the train down once it derails and breaks. You just have to be patient and pick the right time to get on.

I know no one will believe me but I once had 15,000 shrs or 30,000 shrs postsplit of Apple back in late 2000 and early 2001. I bought most between $14 - $14.5. I remember Apple couldn't give the stock away even though it had nearly $14/shr in cash in the bank and virtually no long term debt. Basically Apple was trading at cash value and no value was put to Apple name, property, people, etc. I sold all around $20 in Jan and Feb of 2001 in my trading acct but kept small number of shares in my IRA account which I sold at $55 presplit. If I kept those Apple trade shares, it would be worth over $2mil today.

 

[JS80]

Originally posted by: Naustica
I thought the iPod craze would die down and Apple stock would come back down to earth. Well that was well over a year ago and I sold all my shares at $55 presplit price back then or $27.50 postsplit. I'm disappointed I sold early but I bought it for $14 presplit or $7 post so I don't feel bad. Profit is profit and almost 400% return isn't bad. Plus I bought some AMD at $14.75 with the proceed and AMD is up nicely since so it wasn't a terrible trade.

Thing about Wall Street is that they love hot product companies and that love affair can last lot longer than most people think. But like most love, it usually ends miserably. That's the unfortunate byproduct of the herd mentality. More than likely people will be disappointed with the earnings. Wall Street has always been buy on the rumor and sell on the news. With any hot stock, people's expectation always get out of line and someone is always disappointed with the numbers no matter how good.

Whether shorting or buying puts before AAPL's earning is good idea or not depends on lot of things. Personally I wouldn't play the game. I would much rather bet on red or black. About the similar odds and more fun and more comps. But if I was to play I would watch closely about 2-3 weeks before the earnings and see if there is any big earnings run. If there is and the stock price has risen alot, I would short it right before earnings that day. If it has not and the stock price has fallen good bit, I wouldn't touch it. If it has flatlined, I wouldn't touch it although I would lean towards shorting it. This said, options are different matter and you have to factor in cost of buying certain strike with time decay and it can get more complicated.

I think the smart way to play the eventual Apple downfall is to wait until the chart breaks. The stock is still in the uptrend and I don't like to get in front of a moving train. No one is smart enough to pick the exact top. Only the lucky ones do. Once the chart breaks, you'll have plenty chances to get it to short or buy puts. Just like people had plenty of chances to ride the train up, you'll get plenty of chances to ride the train down once it derails and breaks. You just have to be patient and pick the right time to get on.

I know no one will believe me but I once had 15,000 shrs or 30,000 shrs postsplit of Apple back in late 2000 and early 2001. I bought most between $14 - $14.5. I remember Apple couldn't give the stock away even though it had nearly $14/shr in cash in the bank and virtually no long term debt. Basically Apple was trading at cash value and no value was put to Apple name, property, people, etc. I sold all around $20 in Jan and Feb of 2001 in my trading acct but kept small number of shares in my IRA account which I sold at $55 presplit. If I kept those Apple trade shares, it would be worth over $2mil today.

Thanks for your insight but I wasn't really looking for a trading strategy. I wanted opinions from Tech electronics users of the Apple iPod. The run of up the stock assumes that iPod sales for the holiday season will top analyst estimates. I on the other hand believe the stock will either meet or be within a penny or two, in which case the stock will get hammered by 20% (see best buy stock today BBY they got hammered and it's only a 20 PE stock, AAPL is a 50 PE stock so the magnitude of the loss will be bigger). If the stock drops by 20% 2 days before the option expires, that's like a 100x return...

 

[SparkyJJO]

eh if I wanted a big mp3 player I'd get a creative zen, those ipods are over-hyped

 

[ultimatebob]

Originally posted by: Martin

Originally posted by: ultimatebob
I really wish that Microsoft would release their OWN media player to compete with Apple. Companies like Creative and iRiver have put out some decent products that are compatible with Windows Media Player, but nothing that can truly compete with the either the marketing hype or ease of use of an iPod. Hell, it seems that even Sony can't pull off a decent iPod competitor, and they used to dominate the portable music player industry!

Until someone releases an "iPod killer", I think that Apple is a safe stock to buy. Question is, who's going to be the first company to one-up Apple?

plenty of companies have one-upped Apple, however the iPod is a fashion item, and thus out or the realm tech companies.

A few MP3 players have one upped the iPod on features or price, but I haven't seen any other MP3 players that are nearly as easy to use. None of the other music services have the variety of the iTunes music store, either, and I certainly haven't seen any signifigant advertising or mainstream news coverage on any the other media players out there. Sadly, one of the big reasons that the iPod is so popular is that many folks don't know about any other good alternatives. That's why I want to see Microsoft get in the game... They have enough marketing power to compete.

 

[ponyo]

What does Apple's iPod Hype poll have to do anything with iPod sales over the holiday period? You already said you think they'll likely meet or beat the estimates or be very close either way. You can bet the big boys have/are checking wholesale/retail channels and already have the numbers or will have the numbers way before you. Others will cheat and get it from insiders.

Guidance is key along with the market sediment and mood during the earnings period. You're just looking for pure gamble. You think you can a feel for the guidance from a poll here? If I was to bet I would lean towards selloff since some people are never satisfied and will be disappointed no matter what number or what guidance. But I also like to bet on red at the casino.

I doubt Peter Lynch would approve using his method for gambling. He was little more longterm than you.

 

[JS80]

Originally posted by: Naustica
What does Apple's iPod Hype poll have to do anything with iPod sales over the holiday period? You already said you think they'll likely meet or beat the estimates or be very close either way. You can bet the big boys have/are checking wholesale/retail channels and already have the numbers or will have the numbers way before you. Others will cheat and get it from insiders.

Guidance is key along with the market sediment and mood during the earnings period. You're just looking for pure gamble. You think you can a feel for the guidance from a poll here? If I was to bet I would lean towards selloff since some people are never satisfied and will be disappointed no matter what number or what guidance. But I also like to bet on red at the casino.

I doubt Peter Lynch would approve using his method for gambling. He was little more longterm than you.

Who said I'm not looking for a gamble? This isn't the same as betting red at the casino because your payoff is only 1:1. If I am right my payoff can be anywhere from 5:1 to 100:1. I'm asking ATOT because analysts only go by guidance given by the company; they don't understand market trends. Obviously if the poll was 90% train is going strong that means they or someone else is purchasing the iPod etc. If it's the other way then it probably means analysts are overestimating. I just want a sense of what consumers feel about the product.

I'm not looking for a Long Term capital play here. I want to take advantage of the overly optimistic stock market for short term gain. Besides AAPL, I will be looking into GOOG and CRM.

 

[Damn Dirty Ape]

I had one, but after a week I took it back to sams club. just wasn't using it enough to justify. The first day I had it on pretty much all day, then just trailed off..

 

[imported_goku]

Originally posted by: deathkoba
What the hell are you talking about? Just get one and you'll see what you've been missing out on.

Ya, nothing. I've used it, nothing to see here...

 

[JS80]

Well it seems like I'm always a day late. AAPL is down $2.50 today http://finance.yahoo.com/q?s=aapl

 

[MercenaryForHire]

iPods are awesome. Just buy them for about $20 off eBay when the beret-wearing, turtleneck-donning beatnik poet wannabe breaks the LCD, and you've got yourself a real cheap external HDD.

iPwN3d, bitch.

- M4H

 

[JS80]

bump