Cramer solves the great Apple mystery: How it faked out everyone on Wall Street

When the stock of the biggest company on earth, Apple, rallied more than 6 percent on Wednesday — it was clear to Jim Cramer that analysts got it wrong.

Somehow the company that just sold one billion iPhones managed to fake-out almost everyone on Wall Street.

"I think I have solved the mystery. The chief pillar of the bearish case on Apple was the looming shortfall in cellphone sales," the "Mad Money" host said.

When Cramer sat down and read through the commentary from analysts, he found it filled with what he called "faux buy recommendations." These were analysts who already had one foot out the door, and made the assumption that because Apple hadn't ordered enough chips to make a lot of phones, there must not be demand.

Cramer believes all the analysts did was to stitch together commentary from Apple's usual suppliers, even though suppliers must mask results in order to keep Apple business.





The silhouette of Tim Cook, chief executive officer of Apple, during the Apple World Wide Developers Conference (WWDC) in San Francisco.
David Paul Morris | Bloomberg | Getty Images
The silhouette of Tim Cook, chief executive officer of Apple, during the Apple World Wide Developers Conference (WWDC) in San Francisco.
"What no one even imagined, is that maybe Apple didn't order enough chips because it underestimated the demand." -Jim Cramer

The most recent negative data point came on Tuesday from Texas Instruments, when it said cellphones were weak. Last week, Skyworks Solutions said the same.

The thesis was that if Apple did not place a lot of orders with the chip makers, than it would be stuck with inventory and may need to slash prices to get rid of the excess supply.

"What nobody thought about, what no one even imagined, is that maybe Apple didn't order enough chips because it underestimated the demand," Cramer said.

Perhaps Apple itself didn't realize how compelling its new phones were and didn't realize there would be more people switching from Samsung than ever before and upgrading from older phones.

In fact, Cramer said, it may have not realized how popular it is in places like Japan, India, Turkey, Russia, Brazil and Canada.

"That is really the only explanation for how so many analysts interpreted the data wrong," Cramer said.

Ultimately the facts did not add up for Cramer. He speculated that Apple may have even become too negative on its own prospects. After all, when enough people say a company doesn't know what it's doing, it is natural to become more conservative.

Apple's management became more conservative, and it ran into a high quality problem: too much demand.

"The bears masquerading as bullish analysts just got Apple wrong … They kept wanting to ask 'when is the funeral.' They left having to revise their estimates upward, not down. That wasn't in the plan," Cramer said.

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