What gives? Scanning through the tech headlines online last night and today, I see two stories that jump out at me about Apple, Inc. One story [Barron's] says that Apple market valuation just hit a quarter trillion dollars. Amazing but maybe not surprising, given that they recently became the proverbial 900 pound gorilla in the tech sector, passing Microsoft. Given that two stock price predictions I heard about last Dec put Apple at $250 (it’s right now at $274, but reached an all-time high of $275) and $300+ for some time later in 2010, that valuation will likely rise. At the moment, according to Barron’s, only Exxon Mobil is higher. But not so fast. There’s another headline [Business Insider] that some analyst thinks Apple stock will drop like a stone to $42/share,  somewhere between Fall 2010 and Fall 2011.

So which is it? Up or down? Most statistics about all the relevant market share Apple is gaining suggests that their value is only going to grow. Not to mention, analysts predict that iPhone 4’s upcoming launch weekend will probably result in sales of 2-3 million units [All Things Digital]. So I wouldn’t be surprised if they shoot to $500 in 2011 or 2012 based on those statistics, though that’s not a prediction. Although Gene Munster, and analyst at Piper, thinks it could hit $1,000 within 5 years. (I don’t own Apple stock but if it drops and I can afford it, I would. I do hope it will reach that $1,000 level eventually, though I really wish they’d split their stock so smaller investors could buy. On a side note, I wish Google split their stock, too. Any company who claims to be “open” but has their stock at levels that keep the average investor away makes me doubt their claim.)

So what possible reason could there be to destroy confidence in Apple to the point that shares drop so drastically to $42? Well according to BAM Investor’s tweet on Twitter — they also put out a press release at PR Web — behavioral analysis suggests a serious fall in share price is coming. When you consider the scandal going on right now regarding the iPad security breach (which released 114,000 customer details into the wild, including that of top U.S. politicians), and iPhone 4 pre-order security breach which matched customers with the wrong person’s credit cards, those are events that could shake confidence — despite the fact that some are blaming cellular carrier AT&T for these security problems.

As a technical investor myself, in the past, I’m prone to believing that “things will get worse before they get better.” But wait, you say. Apple is already “better”. Their shares have been going up for the past decade. Ok, true, though the share price often dips before rising again. What do I think? I think the share price will drop significantly and then it will shoot its way up over $500 over a few years. The mobile platform will dominate computing and communications, and Apple’s hardware, app market share, and the dozens of new patents granted to them put them in very good stead to be king of the castle for quite some time. At least until the next company comes along to supplant them. Think it won’t happen? Tell that to IBM, Microsoft and even Google. Three to four years ago, while regularly writing about telephony and VoIP, I predicted that Google would be pushed out by whichever company would come to dominate the mobile space — which I think is exactly what’s happening with Apple, at least for now.

Notes: Barron’s, Business Insider, All Things Digital, PR Web, Bam Investor.

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