Jim Cramer: Every time, Apple comes roaring back (video)

The host of Mad Money, quoting the Fibonacci Queen, sees Apple going to $227 or even $243. 

Posted on CNBC Tuesday evening. The Apple bit starts at 2-minutes.

S&P 500 and Apple can surge more than 11%, says Jim Cramer from CNBC.

My take: Cramer’s sticking with his razor/razor blade metaphor. Would be more apt Apple weren’t still making more money from razors than blades.

6 Comments

  1. Gregg Thurman said:

    “My take: Cramer’s sticking with his razor/razor blade metaphor. Would be more apt Apple weren’t still making more money from razors than blades.”

    The razor/razor blade analogy was created to describe Gillette’s strategy to GIVE AWAY the razor, then selling millions of razor blades.

    Apple’s ‘razors’ (iPhones, iPads, et al) are viewed so positively that it doesn’t have to give them away to generate significant razor blade (Services) revenue. It wasn’t until Apple’s target market had absorbed as many iPhones as it could that Services revenue even appeared on WS’s radar. Then, in typical WS fashion, market saturation was viewed as a negative, without considering what could be done to monetize the most loyal consumer electronics consumers on the planet. Apple started touting Services before iPhone unit sales hit the saturation ceiling, but WS (the WS analysts we see in print media and on CNBC) wasn’t listening. In the 9 years since FY2010, Services has grown from $7.521 Billion to this year’s (FY2019) estimated $46.674 Billion, and that was without (until very recently) a grand plan including Apple Pay, Apple Card, Apple Music, Apple TV+, Arcade, Apple News+, etc.

    Remember too, that computers only went mainstream when you could DO (consume) something useful. With the iPhone and App Store, Apple created the market for “something useful”, and is now exploiting the installed base of those loyal consumers. I dare say that it won’t be long (<5 years) that Services will predominate and be the engine that drives Apple's revenue growth.

    4
    July 3, 2019
  2. Gregg Thurman said:

    “The host of Mad Money, quoting the Fibonacci Queen, sees Apple going to $227 or even $243. ”

    I don’t see anything unusual in this prognostication. AAPL’s Historic Trend (FY2011 to date) shows a very clear summer slump that bottoms during the July 4 week, with AAPL then rallying (on average) about 25% by the following January earnings report.

    The Historic Trend indicated that today would be the bottom of the summer slump. We haven’t seen that slump this year because AAPL had been so depressed by all the negativity surrounding the Sino/USA trade dispute, that has recently abated, causing AAPL to rebound sharply.

    Still, if last Friday’s intraday low ($197.05) is the summer low, adding 25% puts AAPL at ~$246 (very much in line with Cramer’s $243 forecast).

    1
    July 3, 2019
  3. Gregg Thurman said:

    “Two good posts, Gregg!”

    Thank you, Joseph.

    I’ve been asked about the summer slump on several occasions, mostly “why?”.

    The answer to that question is simple. Just like today, the markets close early the day before July 4, and just like this Friday, a great many traders will not return to work until the following workday, in this case, Monday.

    Depending on when July 4 actually lands you can slide that three day period (the day before, day of, and the day after) back and forth and what you are left with is a greatly reduced trading week. When July 4 falls on Wednesday you get a really significant drop in trading activity as traders take the entire week off.

    I’ll bet that if you look at any other publicly traded equities you will find the same (low of summer) phenomenon.

    0
    July 3, 2019
  4. Gregg Thurman said:

    My dog wishes that July 4 and New Year’s Eve never happen.

    2
    July 3, 2019

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