Apple pops on Mad Money report
Jim Cramer. Photo: CNBC
Apple (AAPL) shares rose 1.3% in after-hours trading Tuesday after Mad Money host — and confessed Apple stock manipulator — Jim Cramer raised his price target from $200 a share to $264.
Shares opened Wednesday at $178, up 1.6% from Tuesday's close, and by 12:25 p.m. were trading at $182.72 on high volume. The stock ended the day at $181.87, up $6.71 (3.83%), its strongest close since June 2008.
Cramer had argued on air that an accounting rule change that allows Apple to recognize the "true earnings" from its iPhone sales will cause the Street's 2011 earnings estimates for Apple to go from $8 a share to $12 a share.
The rule change is now in draft form, but Cramer believes will be approved by the Financial Accounting Standards Board (FASB) in a few weeks.
Many analysts have written about the effects of Apple's so-called subscription accounting, and company executives have taken pains to explain its significance at nearly every quarterly earnings call.
But Cramer believes the accounting change will take most money managers — whom he says don't look past Apple's price-to-earnings ratio — by surprise.
Commentators at Investor Village's AAPL Sanity board were skeptical of Cramer but impressed by his ability to move the market. "Hey if the guy can pump us to 260 then all the power to him," wrote one.
Another re-published a eyebrow-raising tweet posted at 6:18 p.m. ET Wednesday.
anyone notice that $AAPL vol spike RIGHT BEFORE cramer went on to talk about it? shady business over @cnbc
Cramer's video is copied below. You may want to turn your volume down.
Also, just for fun, the Jon Stewart Daily Show segment in which Stewart confronts Cramer with the famous video of Cramer bragging to a reporter from The Street about how easy it is to manipulate Apple stock price.
See also:
All, PED is right here. I watched that video (both on the Daily Show and on YouTube) and it was very, very clear that Cramer did pump stocks up or down. His argument was that it wasn't illegal so who cares. He was, of course, correct.
Always remember–you get the behavior you incent. If rules and social mores in a business support a certain activity and you can get wealthy from it, that's what's going to happen. Don't blame the Wall Streeters from doing what's legal…blame the regulators for turning a blind eye for years and years until the public got angry. When markets are truly free you get people who exploit them. C'est la vie. The cat and mouse game (and it is a game, complete with fabulous rewards) goes on.
How many Apple computers are in that room with Cramer?
How many Apple products does he personally own?
Cramer represents all the people like himself, an entire demographic, so that is why analysts and professional money managers watch him. I just wonder how many people (numbers) that would be.
You think that's good, but I listened to Cramer and I made enough in 1 week to pay for an Ivy league college (I'm changing the name today) and buy a car company!
Bottom line…no one with any money or good sense listens to Cramer…he's purely entertainment for the masses
Well I listen to the man while driving bought some stock he recomended. In 2 months time I made enough to pay for my sons Ivy league college bill for 2 years along with buy a new car.
So far we are up 35% with Apple.
Ex ped, I don't normally criticize you, but the statement "he is clearly bragging about having done it himself" can no longer be verified, since the video has been removed. Now, I have no reason to doubt you or your ability to remember accurately, but you need to hold yourself to a higher standard.
If it can no longer be verified, you shouldn't make it a statement of fact, only of recollection. I suggest rewording your statement to something like "to the best of my recollection he is clearly bragging about having done it himself".
BTW, thanks for the good work!
ex ped: Sacto Joe, I'll take any praise I can get from you. The Dec. 22, 2006 video comes and goes, but the text lives on. The nut graph is this one, where Cramer explains how easy it is to "foment" uncertainty and doubt about a stock:
"You can't create yourself an impression that a stock is down, but you do it anyway because the SEC doesn't understand it … Apple's very important to spread the rumor that both Verizon and AT&T have decided they don't like the phone … You also want to spread the rumor that it's not going to be ready for Macworld. And this is very easy because the people who write about Apple want that story, and you can claim that it's credible because you spoke to someone at Apple, 'cause Apple doesn't … they're not going to comment … So it's really an ideal short. And again if I were short Apple, I'd pick up the phone and I'd do that today."
"When I watch that," Jon Stewart told Cramer last March, "I can't tell you how angry that makes me."
Cramer is certainly a showman, but let's pause before trashing him on his previous comments about Apple: (1) months and months ago he predicted another great year for Apple, and indeed… (2) When many pundits were seemingly obsessed (inappropriately, I thought) with Steve Jobs health issues, Cramer came out big time for leaving that issue alone. (3) In the famous interview with John Stewart, I don't think he said that he himself manipulated Apple stock or even approved of it; he simply revealed that it was being done. And he is correct that it looks like more good times for Apple.
ex ped: In the Daily Show interview he says he was simply revealing what was being done by others. In The Street video — since removed from YouTube at The Street's insistence — he is clearly bragging about having done it himself.
It is very interesting that you do not post any criticisms of stock manipulators "lies and/or predictions" for Apple that are negative in attempts to drive Apple's stock price down. Manipulating short seller are OK with you?
ex ped: On the contrary, I've criticized idiocy of all stripes.
Have to disagree with you about that, anony. Cramer's high visibility makes his rantings (excuse me–analyses) disproportionately effective compared to the Goldmans, Pipers, etc. After all, there is a "Cult of Cramer". I'm not aware of a "Cult of Munster". Are you?
Yo Phil, you know what FASB stands for? Financial Accounting Standards Board. If you want to write an article that is based on an accounting rule it would lend some credence to your reputation if you had that one correct.
ex ped: I made the mistake of cutting and pasting it from the CNBC's report. I usually get that one right, as my earlier posts will show. Fixed now. Thanks.
@ Joe McNally – I think your comments about Cramer 'playing with' people's savings are a bit misguided. Cramer's recommendations have similar effects on individual stocks as do the other professional analysts on the street. Had Goldman Sachs, Piper, or someone come out and announced the highest current price target on AAPL, I think you would have seen a big move to the upside as well.
Cramer's a self-admitted market manipulator who should be in jail with Madoff. Now he's got Apple "religion" and predicting a rosy forecast. Even more frightening is that the market actually still responds to this idiot. These people are "professionals" who manage other people's money and they're listening to Cramer???? WTF???
When I read about Cramer's Apple comments yesterday, I just KNEW that today would be a blockbuster for Apple stock. As one who has a fair bit of Apple, I can't help but smile a little today! On the other hand, I do find it more than a little scary that this one entertainer/financial guru/loudmouth can use his media access to essentially "play with" people's savings and investments as he clearly does. I personally don't watch him because I can't stand to. But apparantly a lot of people, including fund managers, take his word as the gospel truth. Very scary!
"True earnings" are the cash flow behind the earnings. Cash flow will not change and the proposed accounting change is merely form over substance.
Cramer’s conclusion is very amateurish.
You are always negative when Apple goes up. You chastise Cramer and don't even have your facts straight. You say"Cramer raised his price target from $200 a share to $284." Cramer's target is $264. Check it out.
"As a result, Cramer expects Apple’s 2011 earnings per share to climb 50% to $12, up from the present $8 estimate. This seemingly expensive stock, trading at 22 times earnings, would then look “dirt cheap,” he said, “the money will pour in,” and investors will take AAPL right back up to the 22 price-to-earnings multiple. Hence, Cramer’s price target: $12 of EPS in 2011 times 22 equals $264." You rush to judgement. In this case I do believe that he is right.
Cramer said his new Apple price target is $264, NOT $284 as DeWitt reports. For those that are hard of hearing, Cramer even showed a very large flash card showing the $264 price target.
Here is the CNBC video clip:
http://www.cnbc.com/id/32859463/site/14081545?__source=yahoo%7Cheadline%7Cquote%7Ctext%7C&par=yahoo
ex ped: Thanks. Fixed.
Don't know why you have to add "and confessed stock manipulator" to your report. Why bash the guy over old news. Anyway, Cramer only raised his price target to $264, not $284. He used a 22 p/e and $12/share in earnings to get his number.
http://www.thedailyshow.com/watch/thu-march-12-2009/jim-cramer-extended-interview-pt–2
Comedy Central has the clip. It's in the last minute of this clip 2 (of three).
ex ped: Thanks for digging that up. I've added it to the post.