While the country and market has been slowly bouncing back from Monday's surprising defeat of the Wall Street bailout package, Apple Inc. (NASDAQ: AAPL) is still down 15% for the week. On Monday, Apple lost 18%, about double what the Nasdaq did. It came back a little Tuesday, then lost 4% again today. Since its August high of $180, it's lost lost 40% of its value.
As Brian White pointed out just last week, the stock's decline doesn't reflect its rising sales. Apple is getting a bigger share of the computer market.
The news on Apple Monday was that two analysts downgraded Apple due to worries that consumers -- now possibly going broke -- would not want to buy more Apple stuff. But Fortune's Philip Elmer DeWitt pointed out that one of the analysts (the one from Morgan Stanley) was one of the farthest off in predicting second quarter results.
CNBC noted that the worries are about the economy, not about anything Apple is doing wrong in itself. CNBC also questioned the analyst's interpretation of the survey he used as one reason for his Apple downgrade Monday. While indeed the survey shows people's intentions to buy Apple products has declined, the drop is quite small, which in this economic environment is really pretty positive.
It seems odd then that the stock getting hit harder than the market. It's not like Steve Jobs was into credit default swaps on sub-prime mortgages.
Apple down more than market on mainly economic fears
Posted Oct 1st 2008 5:50PM by Carol Vinzant
Filed under: Analyst Reports, Apple Inc (AAPL), Recession
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Reader Comments (Page 1 of 1)
10-01-2008 @ 7:33PM
Shelley said...
I always find it ironic when suddenly the analysts downgrade, but the move down in the stock had already been underfoot. Its why we wanted to get a service in the hands of individual investors that truly would protect them while still allowing profits to grow so long as the stock remains strong. That's why on June 9th, SmartStops alerted its users that at $176.07 it may be entering a downtrend. time to exit. And as it proceeded downward, we kept on alerting. ALWAYS have a smart exit strategy in place for yourself in the stock market. These analysts may move a stock, but what you'll find is that the move has already been underway. See http://www.smartstops.net
10-01-2008 @ 9:16PM
Unknown said...
Consumer stocks such as AAPL are often disproportionately hit by economic downturns. So while the WMTs of the world keep chugging, AAPLs take the hit. AAPL was flying quite high in the 180s and would have had to have unbelievable results to sustain such a price. However, I agree that it has been hit too hard, and is currently a value below $120, and still has long term growth potential beyond the coming/current downturn.
10-02-2008 @ 10:50AM
Mike O said...
I think the downgrade makes sense if you considering the following:
1) The economy is in trouble, so people will put off purchasing a new MacBook or iPod.
2) School is already in session, so we'll see far fewer computers sold this quarter.
3) The market is saturated with iPods; people will simply use their old model longer.
4) iPhone sales, while still brisk, have peaked. With less money, people may seek out less expensive alternatives.