As optimistic as it may be to look at the glass-half-full prospects of the company, investors should also start asking some very important questions.
What is likely to happen when the IPO lockup period is over? Will early investors rush to dump the stock and move on with their lives? Also, when are insiders going to start buying the stock? After all, if they loved it at $38, it goes without saying they should love it even more at $20.
Will analysts start downgrading the stock? In other words, will the company be given more reachable goals? Although it reported what I considered respectable numbers in its most recent earnings report, the company also revealed slowing revenue growth -- whereas its chief rival, Google (GOOG) continues to trend in the opposite direction.
So far the company has shown to be pretty resilient and investors have (for the most part) said $20 is fair value. But the question is, for how long? With the stock now trading almost 50% below its IPO price of just three months ago, it is hard to ignore the possibility of a pop while the company works towards fixing what ails it.I think the company will prove eventually that it is more than just a fad. But it has to prove first that in addition to being a good idea it has a better underlying business. Until then, it would appear that for this current brief period, its technicals have surpassed its fundamentals and that just might be enough to call a bottom -- at least for now.
Follow @rsaintvilus At the time of publication the author was long AAPL but had no position in any of the other stocks mentioned. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage. Richard Saintvilus is a private investor with an information technology and engineering background and has been investing and trading for over 15 years. He employs conservative strategies in assessing equities and appraising value while minimizing downside risk. His decisions are based in part on management, growth prospects, return on equity and price-to-earnings as well as macroeconomic factors. He is an investor who seeks opportunities whether on the long or short side and believes in changing positions as information changes.