The $239 billion loss in market value is a vote of no confidence in Apple’s future
The $239 billion loss in market value is a vote of no confidence in Apple’s future
Apple stock dropped from a high of $705 per share in September 2012 to $450 yesterday, a loss of $239 billion in market value in just 4 months.
Apple-aholics and shareholders hope this is an aberration but historically high-flying stocks generally have nowhere to go but down.
In the stock market, there are stars and dogs. Apple is now a dog, something I predicted in August 2012.
Apple’s first problem is they are selling old technology after leading the market in touch phones and tablets. Samsung Galaxy is the hot new brand.
The second problem is that any stock that rises like a meteor is likely to become a falling star according to market history.
Why people are dumping Apple technology
When Apple created the iPod, it was the coolest MP3 player. When they released the iPhone 5 years ago and the iPad 3 years ago, they were ultra cool.
People wanted to own Apple products. They waited in line for hours to be the first to own the latest Apple iPhone or iPad.
However, the competition caught up with Apple and passed them more than a year ago. Everyone has a bigger screen than the iPhone, except the cheaper phones.
Other smart phones have better cameras, more storage, faster processors, lower cost, and bigger screens. The Samsung Galaxy III launched with a video that went viral and catapulted Samsung unto the world leader in smartphones.
“The Next Big Thing is Already Here – Samsung Galaxy S III” successfully mocked the iPhone as something your parents would like, not hip young people.
Through technology and successful marketing, Samsung is now the #1 smartphone and Apple stuck at #6. Remember when Apple watchers predicted the iPhone would take over the world. Those days are gone.
To add insult to injury, Apple’s software for the iPhone has stumbled badly, like the Google Maps fiasco. Thanks to Apple’s stumbles and bad strategy, Android maker Google has the number 1 and 2 most popular free apps for iPhone – Google Maps and YouTube. Chrome and Gmail are gaining as well.
In December Apple upgraded iTunes, their music player and store. Somehow in the process, more than 700 purchased songs and videos were wiped off my iPhone.
Apple says they are now stored on iCloud. That’s nice but I paid good money for those songs and videos. Unless I continue to pay an annual fee to Apple, they will be wiped off iCloud and my money gone.
iTunes 11 losing songs on iCloud
Apple did give me a choice: I can download each song and video again from iCloud to my iPhone and they will stay there, at least until the next change in iTunes.
It has taken me two days of work to sort out where the songs are and another 2-3 days to get them back. Thanks Apple for making something great – iTunes – a pain in the butt.
Over the holidays I got to play with a Samsung ATIV S Windows 8 phone. To get music on the phone, it was a quick drag and drop from my computer’s music library. People with Android phones have the same system that eliminates the troublesome iTunes Sync. I can’t wait to dump my iPhone.
Why people are dumping Apple stock
Stocks are hot because they are the new hot thing. Apple is the old thing now. Samsung, Android and maybe Windows Phone are new and maybe better phones. Even Blackberry is back in the game.
Apple’s revenue growth has evaporated in the past 9 months. The financial press about Apple is trending negative. The LA Times reports “Apple shares tumble after relatively unimpressive earnings report. Apple posts record revenue and profit, but disappointed investors send its shares sliding more than 10% in after-hours trading.
The Wall Street Journal headlined “Apple’s Magic Wears Thin as Its Earnings Disappoint” and followed up with analysis of whether or not Apple’s days as stock market star are over.
The $705 price for Apple stock was dependant on Apple maintaining profitability and high growth. The high growth is over, at least for now, says Bloomberg. “Apple Sales Gain Slowest Since ’09 as Competition Climbs. Apple Inc. (AAPL) plunged the most in more than four years after posting the slowest profit growth since 2003 and the weakest sales increase in 14 quarters, fueling concern that
mounting costs and competition may curtail growth.
Analysts continue to pump out bullish predictions for Apple hitting $700 to $800 but that seems unlikely.
The question how is how low will it go before the stock hits the bottom?
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