Today, Apple (AAPL) turned negative again after a steep recovery yesterday. On December 26, the stock rose 7.0%, while today at 2:30 PM ET, it was trading with 4.0% losses at $150.83. At the same time today, the S&P 500 benchmark and NASDAQ Composite Index (QQQ)(VTI) were down 2.5% and 2.9%, respectively, after solid recovery in the previous sessions. While today’s broader market sell-off is taking a toll on Apple investors’ sentiment, there’s another factor that could be affecting its stock movement. Let’s take a look.
Analyst targets $117.75
According to a CNBC report, the managing director of London-based equity research firm Pelham Smithers Associates, Pelham Smithers, sees more significant downside in Apple stock. In a note to CNBC, Smithers said, “We’ve seen [Apple] on valuations even lower than where they are today. And with the Qualcomm lawsuit, smartphone exhaustion and trade worries, we could easily test those historic lows, which would mean up to 25 percent downside from here.” The report suggests that Smithers predicted a drop in Apple stock “to 117.75 — a price it hasn’t seen since early 2017.”
More worries for Warren Buffett
Apple was the largest single holding of Warren Buffett’s Berkshire Hathaway (BRK.B) at the end of the third quarter. In the third quarter, Buffett’s company bought about 522,902 more Apple shares. Berkshire owned about 252.5 million Apple shares at the end of the third quarter. Its stake in Apple rose to $56.99 billion last quarter, up 22.2% from $46.64 million in the second quarter.
A consistent drop in Apple stock could cost Buffett a fortune unless he has already sold some of his stake in the fourth quarter. We won’t know until Berkshire’s next SEC filing in the first quarter of 2019.
In the fourth quarter so far, AAPL had tanked 30.4% as of December 26. Meanwhile, Microsoft (MSFT), Intel (INTC), Amazon (AMZN), Google (GOOG), and Oracle (ORCL) have lost 12.1%, 2.3%, 26.6%, 13.2%, 13.5%, respectively, quarter-to-date.