By Philip Elmer-DeWitt
November 16, 2012

FORTUNE — “Run for the hills!” a reader e-mailed yesterday, “because its going to get ugly. $400 by April 2013, $270 by next fall … almost inevitable.”

He continued: “Zabitsky’s target of $270 was dead on, just early on the draw.”

That’s a reference the advice of ACI Research’s Ed Zabitsky, who set a price target of $270 a share last January and famously advised his institutional clients to sell Apple (AAPL) short just as the stock was beginning an eight-month, 68% run from $420 to $705.

I’ve been getting a lot of e-mails like that lately, and seeing similar sentiments — although not ¬†always that extreme — expressed on CNBC, Seeking Alpha and even mainstream business publications such as, ahem, Forbes.

A lot of investors are wondering how low Apple can go in the wake of the sell-off that took its share price from over $705 in September to less than $523 in Thursday’s trading — a 26% drop. [UPDATE: It fell below $506 in late-morning trading Friday.]

Apple has had worse sell-offs in the past. In 2002 it fell 41% in the space of four months. During the 2008 fiscal crisis it fell 45% in just six weeks.

But there are limits to how far Apple can go today. For one thing, it’s sitting on more than $121 billion in cash and marketable securities, or nearly $130 per share, with zero debt. It’s also paying, at today’s stock price, a 2% dividend. And by its own conservative estimates, it expects to sell more than $52 billion worth of iPhones, iPads, iPods and Macs this quarter.

In a note to clients Thursday, Morgan Stanley’s Katy Huberty laid out her bull, base and bear cases for the stock. We reported on the first two cases¬†yesterday. Here’s her bear case:

“Apple begins to cede market share to Windows 8 in mature markets and lower-priced solutions in emerging markets. Single-digit revenue growth and lack of continued gross margin expansion limits EPS growth. P/E multiple is depressed at 11x due to growth and competitive concerns. Price target: $495.”

I supposed Ed Zabitsky and my doomsday correspondent could be right, and Apple could fall all the way to $400 or even $270.

But I wouldn’t bet on it.

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