Paul Schatz: Apple is Going Down, Down, Down

DeclineWhile the recent pessimism surrounding Apple (NASDAQ:AAPL) shares seems to have blown over, the stock is still 23 percent below its record high reached in September. Bullish analysts have tried their best to ease concerns about the company’s long-term prospects, but there are some who refuse to believe in a continued growth story for the company. Paul Schatz, president of investment firm Heritage Capital, is one of them, and he thinks Apple may be in the middle of a multi-year decline that will see its shares fall between 50 and 70 percent from their current value.

Why Does Schatz Hold a Negative View on Apple?

“If you’re a trader, I think Apple has some upside left in it,” Schatz told Yahoo Finance in an interview. “But what we saw in that twenty-plus [percent] decline was just the first leg down of a multi-year decline, which I think ends up knocking 50 to 70 percent off the stock.”

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The investment specialist won’t even be convinced by a special dividend, if Apple were to announce one this month like some other companies, such as Costco Wholesale (NASDAQ:COST), have done ahead of the impending fiscal cliff. In fact, such an announcement, leading to a potential pop, would be a “bell-ringing” opportunity to sell while the stock was strong.

According to Schatz, anyone with a lot of Apple stock would do well to either ease up on those holdings or use options protection. “If your thesis, like mine, is that long-term Apple is going to be sub-$500 or sub-$400 [a share], then you can’t get too greedy on the upside, because the upside is going to be fleeting,” Schatz said.

Is Schatz Really Talking About Apple?

Schatz will not even rule out a short position, though he admitted it would be tough with a company like Apple. “Not yet, but I think it’s close,” he said about the possibility of shorting Apple. “Whatever resolution we get with the fiscal cliff, whether it’s good or bad, it’s going to lead to problems with the economy, and Apple’s gonna take it on the chin.”

Schatz’s analysis hit Apple hard Wednesday with shares closing down over 6 percent.

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