Apple Inc. saw a sell off on Monday, but it’s rebounding strongly on Tuesday morning. Three major factors are at play. Wells Fargo upgraded shares in the firm to Outperform early on and said the sell off was overdone, European markets recovered after a renewed China selloff, and Tim Cook appears to be getting more active in his defense of Apple’s share price.
At time of writing shares in Apple are selling for $109.89 , up 6.57 percent in pre-market trading. Rocky trading on Monday saw the firm’s shares close down 2.5 percent to $103.12. Shares hit an intra-day low of $92, a level not seen since June of last year.
Well Fargo warns against over-selling Apple
The sell-off on Monday, as could be seen from the quick bounce back and this morning’s buzzing futures market, was overdone across the board. Wells Fargo wanted to address Apple , however, which was in pain long before the problems began on Monday morning.
Shares in Tim Cook’s firm have lost more than 20 percent of their value in the last three months as traders worry that growth will slow as a result of lower smart phone sales across the world.
Bank of America’s Merrill Lynch unit was also quick to defend Apple on Tuesday morning. The analysts kept their Neutral rating on shares, but their price target is at $130. They said that a slow down in growth in China would result in an upper limit of 5 cents being taken off of full year earnings.
On Monday, as the price of shares in the iPhone maker crumbled, Brian White of Cantor Fitzgerald and Daniel Ives of FBR Capital both said that the slow down in China was being blown out of proportion. Mr. White kept a $195 price target on shares while Mr. Ives said that the release of the iPhone 6s would unleash a new wave of growth.
Apple recovers because Tim Cook cares
Tim Cook has done more to directly help Apple shareholders than Steve Jobs did during his reign at the head of Apple, and he went one step further on Monday morning. As the market punished stocks across the board and Apple fell by more than 10 percent, Tim Cook issued a reassuring statement about the state of Apple business in China.
Jim Cramer, of CNBC, sent Mr. Cook an email asking him to clear up a few things about the firm’s business in the East Asian economy. Mr. Cook, in a very unusual move, responded. He said that business was brisk in the country despite rumors that the entire economy was taking a dive and bringing Apple with it.
Apple shares have been propped up in recent years by the dividend payout it issues and the buyback program. Both of those, put together by Tim Cook and CFO Luca Maestri, and ex-CEO Peter Oppenheimer are still there and still adding value to the holdings of those with shares.
The capital returned has been joined by a new factor in Tim Cook’s active defense of his firm’s value. We’ll see how that proceeds in the months ahead, and how his appraisal of the firm’s performance holds up when it releases earnings for the three months through September.