If someone had told me this summer that the worst performing stock in my portfolio over the next six months would be Apple and the best would be Netflix, I’d have laughed. Now, 6 months later, Apple is trading at $450 per share, down from its 52 week high of $705.07. On the other hand, Netflix has outperformed everyone’s expectations rising from its summer range of $50-60 to a new 52 week high of $177.25 for nearly a 300% gain.
Both companies released their Q4 earnings reports last week. Apple reported $54.5 billion in revenues and $13.5 billion in profit. While its revenues just missed analyst expectations, its profits indeed surpassed them. Yet this news sent the stock price tumbling; overnight the share price dropped $50 or 10%. Meanwhile, Netflix posted revenues $945 million in revenues and $7 million in profit. This news bested analyst expectations and resulted in an overnight stock price increase of 60%.
I can’t help some irony here. One company earns billions sending its stock price tumbling while another earns relative pennies causing its stock price to soar. Apple has been almost everyone’s favorite company since it released the iPhone. Yet after it released the iPhone 5 this past fall, investors and consumers alike cried over its relatively small screen size and poor map application. In fact, the Wall Street Journal recently ran an article titled “Has Apple Lost its Cool to Samsung?” All of this negative press would seem to indicate that the sky is falling in Cupertino at Apple’s headquarters.
But the sky isn’t really falling, evidenced by the fact that we all survived the year 2012. We all understand that tech companies are volatile on the stock market. If Apple releases a new iPhone with a big, beautiful 4.8 inch screen this spring, I’d be willing to wager that its stock price would rebound overnight. Also, there is a rumored budget priced iPhone in the pipeline, presumably for developing countries. As for Netflix, it has yet to be seen if the company will ever become profitable over the long term. For now, I’ll hold both stocks and hope for the best.Apple, Netflix, Stock