10/7/2014 Update: Oops! GTAT declared Chapter 11 bankruptcy yesterday and the stock fell below $1 per share. Apparently everything totally fell apart for this Apple supplier as sapphire wasn’t used on either iPhone 6 screen and there is no intention of using it in the future. The inability to repay the loan to Apple put this company under.
GTAT was our last Big Bet Stock Pick back when it was abut $15 per share and it has since gone up to $18.02 where it closed today on 9/2/2014.
Right now there is still no clear indication of how big a part the Sapphire screens will play in the iPhone 6 but we should know by September 9th which is the day of Apple’s big event. Investors are now wrestling with all the rumors they are hearing that run the gamut from no Sapphire on the new models all the way to Sapphire screens for all models.
Clearly if Apple reveals that all forthcoming phones will include Sapphire screens, GTAT stock will likely soar and that is what investors want to hear. But they have to be prepared for every scenario that might include Sapphire only being on the pricier models or only on the 5,5 inch screen models.
Absolutely no one knows right now and there just aren’t any reliable information leaks that are credible.
To see how confusing the situation is for investors, Piper Jaffray rates the stock a “Buy” before the iPhone 6 launch and a couple days later Raymond James rates the stock a “Sell” due to the uncertainty surrounding Sapphire and Apple’s adoption of it.
Should you sell GTAT now and take the gain? We recommend holding if you have the stomach for it and/or if you have a long term investing horizon as there are other catalysts for the stock going into 2015. Right now everyone is focusing solely on Sapphire and while that is admittedly an important segment of the company, there are other reasons to hold the stock.
In fact, if the Apple news about Sapphire is not great for this iteration of the iPhone and the stock drops, it could be a good time to pick up more shares as Sapphire will surly play an important part of the upcoming iWatch and the new iPhones that come out in 2015.