How Apple Sellers Got Burned on Facebook

As the public downgrades Facebook

from “History in the Making” to “Cautionary Tale,” shares are continuing their second straight daily dive, briefly breaching the $31 level in its first few minutes of trading on Monday. Meanwhile, another high-profile stock, Apple

is picking up steam, having gained 9.5 percent today alone. Given the pupular nature of the two stocks and degree of participation they have brought in the market, it is not far-fetched to assume that a sizeable amount of capital has switched back and forth between the two since Friday. Moving back in time to May 10 - when FB was the hottest things with a ticker - AAPL opened near the $575/share level and shed just under 8 percent of its value by the close of May 18, Facebook's IPO. On Monday, AAPL opened at 534.50 a share and by the end of the day it had clawed back over 5%. Meanwhile, FB had shed 11%. Tuesday, as we mentioned, is a continuation of these respective moves. For those traders that are making the round-trip from Apple to Facebook to Apple again, their trading has proven expensive. An investor exiting 10 AAPL shares at the May 18 open of $533.96, would have had gross proceeds of $5,339.60. Those proceeds would have bought 140 FB shares at $38/share. If by the end of trading session on Monday the investor had a change of heart, he/she would have exited FB at $34.03, for gross proceeds of $4764.20. Entering an APPL trade at that moment would have gotten the investors 8 shares. As of the end of trading on Monday, then, the investor would have been down just under 16 percent in terms of capital, or 20 percent in terms of AAPL position. The bright spot of such a back-and-forth shift would also have meant that the investor avoided a further ~2% decline in FB, and captured ~1% appreciation in AAPL.