Once seen as a stock market darling, Apple has taken quite a dramatic tumble this week as its share price continues to plummet, reports USA Today.
Apple still has more money in the bank than does the U.S. government, and the firm reached an all-time high of $134.50 a share earlier in the year. So Apple was until recently seen as the stock to watch in the market. Unfortunately, that image has now been tarnished, with Apple shares falling $6.72, or 6 percent, to $106.02, and with its stock down 8.5 percent as a whole for the week.
Because of these sharp drops, Apple’s stock price is in the red for the year for the first time, with its share price now down 3.2 percent from the start of 2015. This is slightly better than the market as a whole, which is down 3.8 percent on the year, but compared to the all-time high Apple reached earlier this year, the company is now down 20.6 percent. With such a sharp decrease, Apple itself could be viewed as having entered bear market territory.
Of course, this decline involves the disappearance of a great deal of shareholder wealth. When Apple rode the bull, investors were counting their paper wealth by the billions. However, with this strong decline, investors have now seen over $150 billion in paper wealth vanish right before their eyes.
This could of course lead to investors hopping off the Apple train while the going is still somewhat good. In addition, with the continued elimination of smartphone subsidies, customers will begin to experience the true cost of Apple smartphones, which could be a turn-off for those who are more than happy to settle for lower-priced alternatives.
This recent drop could also be seen as indicating that smartphone growth is finally stalling, though market observers are not in agreement on this point.
The biggest fear investors have seems to be how eerily similar these recent declines in Apple share prices seem to be to the period between September 2012 and July 2013, during which Apple lost an eye-opening 43 percent of its value. As was evident earlier this year, Apple has shown resilience in the face of such strong drops in value, which is why analysts remain bullish on the firm in the long term. Even so, investors can’t help but be a bit worried about this recent turn of events, especially given how the U.S. stock market has now seen its sharpest one-day drop since 2008.