This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Why Wall Street Got Apple Wrong This Week

BALTIMORE ( Stockpickr) -- Today may be Friday the 13th, but Apple's (AAPL) bad luck came on Wednesday, when shares dropped 5.4% on the heels of the firm's highly anticipated iPhone event. Apparently, the new iPhones were bad enough to erase $27.1 billion from Apple's market capitalization. Ouch.

Apple would literally have been better off buying Nokia (NOK) and Blackberry (BBRY), shutting down their businesses, giving away their patents, and burning their offices, than releasing the iPhone 5s and iPhone 5c.

It would have destroyed less shareholder value.

But that should be the first indication that Wall Street got Apple very wrong this week.

Before we get any further, I want to make one thing clear: this isn't some "unbiased" article about Apple. I'm no journalist. In my day job, I'm an investment professional -- I pick stocks, and I've recently built a position in Apple. So yes, I'm talking my book right now. But that doesn't make what I'm about to say any less true.

For most of this year, I've said that Apple looks cheap, but that I wouldn't touch it with a 10-foot pole. Apple's stock sucked. But that's changing, even in spite of Wednesday's selling.

Dissecting the iPhone Event

The second Apple's price started reacting to the firm's Tuesday event, it was clear that Wall Street got it all wrong.

Every other year, Apple announces an all-new iPhone - and in between those years, Apple announces a faster, slightly upgraded "S" model. Last fall, Apple released the iPhone 5, so the announcement of the 5s wasn't a huge surprise. But the 5c was a departure from Apple's past strategy.

Previously, Apple has always offered the older version of their phones for a $100 discount to the current iteration. That meant that the iPhone 5 was likely to go on offer for $99 with a 2-year contract when the iPhone 5s was announced. But the introduction of the 5c changed that, repackaging the iPhone 5 into colorful plastic cases with a few minor upgrades (a better front-facing camera and bigger battery, for example).

1 of 4

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7870 -13.6380 -0.30%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs