Apple gains shares as Facebook investors return?

Karen Haslam
23 May, 2012
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If you’d have bought Apple shares last Friday you’d be happy. The share price rocketed from US$530 on Friday May 18 to close at US$561 last night. Not bad for a day’s work.

So what caused the shares outperformed the market? One theory is that investors were moving their dollars from Apple last week to invest in Facebook.

The Motley Fool notes that on the day Apple shares rocketed, “Facebook shares got crushed”.

“Looks like those Facebook dollars are coming right back to Apple,” notes the investing site.

Also potentially pushing up Apple’s share price were comments from two analysts. One dispelled fears that chip shortages at Qualcomm would cause problems for Apple; the other noted that investors shouldn’t fear that carriers are becoming disenchanted with Apple.

Piper Jaffray analyst Gene Munster published a research note dispelling fears that supply constraints at baseband provider Qualcomm will affect Apple. He wrote that there is no shortage of the Qualcomm baseband modem used by Apple in the third-generation iPad, and concluded that will be used in the iPhone 5 as well and that Apple will get “favourable treatment in terms of access to 28-nanometer inventory”.

Goldman Sachs analyst Bill Shope dispelled fears that there will be negative effects due to carriers getting fed up with Apple’s demanding large subsidies for the iPhone, taking away their margins. Shope wrote: “We continue to believe that reductions in smartphone subsidies are unlikely to significantly impact the Apple model or the longer-term value of the platform.”

Shope sees the trend towards fees and extended upgrade time frames as benefiting Apple. As The Motley Fool noted: “One carrier can’t revolt because it would just send all those iPhone customers to a competing carrier.”

The US$561 is far below the stocks highs of $644 which it hit during trading on 10 April, however. Apple’s stock has had a bumpy ride over the past few weeks, with depressed prices and low valuation seeing it fall to US$530.12 on Thursday May 17, causing the stock to lose US$120 Billion of its market cap.

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