iPad: Investors shouldn't think short-term
No doubt about it, Apple stock has been on a wild ride since yesterday's iPad announcement. Investors were hoping Apple would deliver big, and while many Wall Street analysts believe they hit a home run – thanks in large part to not just the technology, but the price point of the device – the stock took a large dip today. On news of the iPad, AAPL closed at $207.88 yesterday. Today the stock lost over 4% to close at 199.29.
Why? Well, most of the time there's a huge sell off after Apple announces something new. A majority of the sell off is because people generally price the stock according to the rumor. It's the old "buy on the rumor, sell on the news" mentality. I've already stated in the past that I believe AAPL is headed past $300, and their latest earnings certainly seem to be pointing in that direction. But how does the iPad fit into all of this?
Frank Cioffi Founder and editor of Apple Investor News has written an interesting editorial for The Huffington Post about what the iPad should mean to investors.
Cioffi (who's long on AAPL) admits that while he's a huge Mac fan, he probably won't be buying the iPad because he's not sure how it would give him anything he doesn't currently have in his iPods, iPhone, or Mac laptops. He goes on to recognize that if one veteran Apple fan doesn't see the iPad as providing something his other Apple devices don't, it can't bode well for the short-term outlook for the iPad, which many investors are expecting to be an iPhone-like megahit. But then he brings up a critical point: the iPad is a slow-growth device.
Apple has just reinvented portable entertainment and mobile computing. No, it's not "magical," as Apple claims, but it is an elegant form factor that will engage niche industries to create apps for their businesses. It will likely become a hit with educators... just as Apple started the decade with the iPod, which grew slowly into an iconic device, I predict the iPad, after initially underwhelming investors, will also grow over time and indeed create a new device category. But it will take time... Apple is planning for the long haul. This company has moved beyond an e-reader and created an e-entertainment device.
Cioffi also points out one thing investors should be even more ecstatic about than the Apple tablet – Steve Jobs' weight. He's looking like he gained some (not a lot, but some) and IMHO is looking much better than last we saw him.
But what say you? Are we going to be seeing dissapointing iPad Q3 numbers? Will the iPad eventually become the next "must have" tech gear like the iPod and iPhone? Tell us in the comments!
Disclaimer: This author owns shares in AAPL. Opinions in this post are those of the author only and should not be considered as investment advice.
