Apple at $400: Share price sinks to new lows, but does it matter?
Summary: A weaker than expected outlook for the third quarter is hitting Apple's share price hard. Analysts are no longer looking at the firm's potential to hit $1,000 a share price, but instead wondering how low it can go.
Apple's share price has plummeted below the $400 a share mark earlier today, after a recent spate of negative analyst opinion over its coming fiscal third quarter outlook.
In late morning trading, Apple dipped below the December 30, 2011 mark, close more 5 percent down from its opening price of $425, but began to stabilize out again in early afternoon trading.
Here's what it looked like:
In just seven months since its peak at $700 a share mark in mid-September 2012, Apple has lost more than 40 percent of its market cap. It even reached a point where by any time Apple chief executive Tim Cook said anything, the company's price would drop during or immediately after.
Earlier this week, Piper Jaffray analyst and part of the Apple faithful Gene Munster cut his estimates and price targets for the Cupertino, Calif.-based technology giant.
Since then, Cirrus Logic cited weaker than expected revenue ahead of Apple's company's second quarter earnings next week. The firm makes analog and audio chips for the iPhone and iPad. As a result of its poor revenue forecast, it suggested that Apple was cutting supplier demand for its iOS-powered devices.
Consumer demand is shrinking. Of course it is. It's a by-product of a popular device that everyone wants, or wanted at the time. We just don't know how much yet.
For the current March quarter, Citi analysts expect Apple will sell 1 million fewer iPhones than expected, and during the June quarter the consensus is down to 25 million from 32 million.
The market is already saturated with iPhones and iPads, but also the product launch cycle is about to kick back into gear. ZDNet's Adrian Kingsley-Hughes noted that there are more than 320 million iPhones in the world already. Compare this to the iPad, where the profit margin is lower than the iPhone, and there are still more than 120 million iPads on the market.
Not everyone wants to jump on the new shiny rectangle that heads out the door by the technology giant. And those that do don't immediately jump. Many, in fact, hold onto their devices for multiple release cycles and upgrade from two devices back — say the iPhone 4, skip the iPhone 4S, and buy the iPhone 5.
But the figure of Apple's share price could be more overblown than we think. Here's why.
Apple's stock was hammered during its first quarter earnings report in January. It fell from around $520 to $440 in the matter of hours. The trouble is for Apple watchers is that the company reported record iPhone sales, booming profits and huge revenues.
But because the company missed expectations made by analysts -- a jumbled figure of subjective analysis that doesn't actually determine anything -- Apple took a swift kick to the financial stones.
Apple will report its second quarter earnings on April 23.
Corrected headline at 14:15 a.m. ET.
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Talkback
Apple at $400: Share price sinks to new lows, but does it matter?
I don't think there was anyone who didn't see this bubble popping except those living in the RDF.
Yeah, but......
Predictable, Foxconn & Sharp posted loses yesterday
IOs may have the largest market share in North America. Though its losing maretkshare everywhere else! There is a limit on how many phones you can sell on a single market. North America is saturated!
So.. until a new revolution comes along (15 ~ 20 years or so). Apple's appeal has started to lose its luster.
The stock market is like a woman...
PE is Good, Is the Market Predicting a Fall?
True. I never thought if it that way.
But now I start thinking of all of the innocent people who were screwed out of there money by bankers.
Re: Just think of all those people who bought at $700
Why someone things this impacts Apple in any way is beyond me.
But it *will* impact Apple
This will often lead to changes in company plans, e.g. moving release dates forward or back, or rushing products to market, or cancelling them, or a thousand other business decisions that might have been different if the board could operate in a vaccuum from the market's sentiments.
Once you're publically listed, you don't own the company anymore. Your share price subtly (and sometimes overtly) affects everything you do. I wouldn't be a good CEO of a large company - that sharemarket pressure would really drive me mad. Steve jobs was pretty good at resisting it, but I don't know if Cook can ignore it as well.
Apple's biggest challenge ...
When 80% of a company's revenues come from just one product with the remaining 20% comprising 4-5 other products, and when the markets the company operates in starts to saturate, the drop in sales of the company's flagship product will result in a rapid decline in its revenues and profits.
This is basic economics 101.
And it's also likely a very large contributor to Apple's precipitous stock price collapse.
Apple had a few years of groundbreak growth by introducing startlingly innovative products starting with the iPod, then the iPhone, followed by the iPad. They then had a couple of release cycles of significant improvement which saw the introduction of the iPad v2 and the iPhone 4.
And they enjoyed all of the mobile computing innovation with little/no serious competition.
And while this mobile revolution was going on, Apple's MacBook and MacBook Air also improved Apple's Mac sales considerably, but they account for a vanishingly small portion of their revenue.
However, Apple's last 3-4 product release cycles have introduced very little that's genuinely new and innovative other than a smaller iPad and a slightly differently shaped iPhone. They did also introduce the Retina-screened MacBooks but their Mac sales declined from 5.1M units to 4.1M units YOY. iPod sales are also decreasing.
And on top of this, there's some serious competition growing from the Android camp and increasingly from the Microsoft ecosystem too, nascent though it may be right now.
I believe it's greatly worrying institutional investors that Apple's innovation-train appears to have ground to a halt and that they are now being out-innovated by the likes of Samsung.
Unless Apple starts introducing truly groundbreaking products to bolster its product & service breadth, they could well face some very serious issues in the coming couple of years.
Whatever
Over Hyped
To many, It does matter.
It also matters to people here who like to post Market Caps.
But the real question...
Shill drivel? The question was asked, and I answered
Or do you think they'll just say "Oh well, time to cut our losses and invest some more money into Apple. BTW - Tim's doing a GREAT job for us!"
I think it's very important for them.
As for the market cap posters, just go back to Sept 2012 and count the number of people posting Apple's market cap here on ZDNet, to see who I'm talking about.
Bubble stock
Unrealistic Expectations
It's usually the so-called "expert" analysts, not Apple, that make wild predictions about Apple's near-term fortunes and then they dump on Apple when it doesn't or cannot meet them.
Predict/guess unrealistic Apple sales, then slam it when they are not met.
I sometimes wonder how the stock market and economy as a whole ever survives such asinine goings on... not to mention suspected or suspicious stock price manipulation that occurs at times.
Where was this outrage when aapl hit $700?
"the so-called "expert" analysts, not Apple, that make wild predictions about Apple's near-term fortunes"
aapl was a $700 share but apple was not. As soon as the experts realized they made a mistake buying at $700, they brought the price down to something closer to what apple is worth.
Considering how apple isn't showing any signs of innovation, I'm expecting aapl to fall even further.
Re: Why weren't you guys
Who said we didn't
I predicted this downfall when Analysts were saying it will reach $1000
OSX lacks touch capabilities while Windows 8 shines from 7 inch to 120 inch screens. Overall Apple outlook is bleak