Top 5 Reasons Apple (AAPL) is Selling Off

April 16, 2012 3:30 PM EDT
Apple (Nasdaq: AAPL) has been selling-off the past five sessions faster than anything witnessed in the stock in at least six months. The dramatic fall has investors asking why.

Here are the top 5 likely reasons:

  1. Profit taking- With shares up 58% YTD the stock has become a source of funds for taxes or other investments.

  2. Earnings expectations are too high- Apple reports Q2 results on 4/24 and Street estimates have been creeping higher into the report. When analysts get too optimistic there is a fear that the company could disappoint. The Q2 consensus is $9.89, versus the company's guidance of $8.50.

  3. Hedge fund rotation out of the stock- Apple has been a hedge fund hotel. It is said that popular hedgie Dan Loeb of Third Point Capital sold all of his position and maybe a lot of his buddies too.

  4. Subsidy cuts- There is a growing sense that the carriers will take some power back after coughing up $700 per iPhone then selling them for $200 and eating the difference. Apple warned about the risk of this in the past.

  5. Index rotation - While not likely, there is talk that Texas Instruments' (NYSE: TXN) addition into the Nasdaq 100 could force some selling of Apple to make room.

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