BY MARK SEBASTIAN
July 19, 2024
REPLAY
Coming Monday
Apple Inc. (Ticker: AAPL)
Big reversal right now in Apple (Ticker: AAPL) along with the rest of the market:
With earnings being reported tonight, here are my pitchfork price targets.
On the upside resistance lies at today’s high at $224.48 and above at $227.20.
Support comes in at $216.87, $214.22 and $210.43.
Licia
TSLA and AAPL are the only stocks up in the last month…TSLA is coming off a VERY rough stretch…
AAPL…not so much.
AAPL is now sporting a PE of 34.02…this is the largest company in the world and the PE is over 34.
For years AAPL was the largest company in the world…but had a PE near 20…not into the 30s. With the stock being the loan wolf that hasnt taken a dip…I think there is real downside.
I firmly believe that AAPL is IBM from 10 year ago…complacent and buying their own stock…
IBM bought millions of shares of its stock where I circled…it STILL is not where it was.
I am not saying AAPL is going to zero…but is the wrong side of 200 in the cards heck yes.
I would short into earnings…unless Licia tells me I am wrong.
AAPL IV pricing a 1 year high
I am going to echo some of Mark’s sentiments that AAPL is a wildly profitable company but oh my is it expensive. Are folks giving up their iPhones? Nope but the company trades at 30x revenue and has not come up with a new product in 8 years. They do keep launching services around the iPhone and that has been enough.
A surprise stock buyback last cycle and New AI services around the Iphone boosted the stock $40 in 3 months time. All of this action really added weight to this earnings cycle. Implied volatility is showing that pricing 1 year highs into a market with a 16 VIX as I write this on Thursday waiting for earnings.
IV30 for the last year in AAPL
I do think this earnings will set up for an outsized move. From an upside point of view I don’t see how AI is making any material impact this quarter. I think giving back some of the AI bump is more likely, maybe to the low 200s. Post earnings how low can the implied volatility go? If it rolls into the teens quickly I would be a buyer. A 16% VIX and 18% AAPL volatility would be relatively cheap. If the IV stays in the 20s, I would expect more downside in AAPL next week.
Out on Assignment
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Mark Sebastian
Founder & CEO, Option Pit
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