Is Apple on the verge of a 'death cross'? Analysts warn shares could slip ANOTHER 20%
Daniel Bates
- Shares down from high of $705 a share in September to current price of $547
- Fears firm could be entering a 'death cross', a financial term where both long and short term prospects are grim
Apple’s shares may plunge another 20 per cent as the company slides towards a ‘Death Cross’, analysts have claimed.
Investors in the tech giant - the most valuable company in the world - have been ‘panic selling’ and brought the price down from its high of $705 a share in September to its current price of $547.
Now there are fears that it could slump to $420 or lower amid fears Apple has run out of ideas.
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Apple's share price over the last 3 months. It has fallen from $705 a share in September to its current price of $547
WHAT IS A DEATH CROSS?
Analysts declare a death cross when both short- and long-term trend lines start to point south, as evidenced by a stock or benchmark’s 50-day moving average cutting below its 200-day moving average.
The crossroads suggest to some that recent declines could turn into a longer-term slump.
However, some believe it could actually attract new investors to Apple.
Analysts said that the company must avoid what is known as a ‘Death Cross’ where both long and short term prospects look grim.
That will happen when a stock’s 50 day moving average goes below its 200 day moving average - a very real possibility with Apple.
The California-based company has been rocked in recent weeks by reports revealing the strength of the competition from Google and Samsung.
Many also feel that after the death of its founder Steve Jobs, it is just a matter of time before it runs out of steam.
On Thursday Apple suffered its biggest one day loss in four years as $35bn was wiped off the value of the company.
Over the last two months the it has lost a staggering $130bn of its worth.
Tim Cook, Apple's CEO. analysts say the firm could be approaching a 'Death Cross' where both long and short term prospects look bad, and believe it could possibly be the start of a long term decline
The Death Cross generally suggests that a company is entering a ‘major turning point’ and possibly the start of a long term decline.
Some analysts however claimed it could paradoxically make Apple’s stock cheap enough to attract a flood of new investors.
Collin Monsarrat, an analyst at Birinyi Associates, said: ‘The data is fairly inconclusive, but if it shows anything, it is that a death cross implies better (stock market) performance’.
John Mendelson, technical analyst for ISI, added that $420 would be a realistic price for Apple and that he expected it to hit that soon.
Since Jobs’ death Apple has made some rare missteps that almost certainly would not have happened were he still alive.
Its chief executive Tim Cook admitted the company ‘screwed up’ with the its new maps service which was not as clear as Google Maps and missed out entire areas.
The world's most valuable company has lost its luster among investors, causing Apple's stock price to plunge by more than 20 percent from a peak reached less than three months ago when the latest iPhone went on sale.
It also launched the iPad Mini even though Jobs specifically said before his death that Apple should never do so.
A recent report from influential research firm IDC predicted that Android powered tablets will have a market share of 42.7 per cent by the end of the year, putting the iPad under new pressure.
A separate report by analysts Strategy Analytics found that Samsung recently took the crown of the biggest selling smartphone in the world.
It found that across the world the Korean tech giant’s Galaxy S3 has overtaken Apple’s iPhone 4S in sales for the first time since it launched.
Strategy Analytics which said that a key factor behind the rise of the Galaxy 3S was the large 4.8 inch touchscreen, although once sales figures for the iPhone 5 were factored in Apple was expected to return to the top spot.
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