(Collapse.news) On a day when the Dow Jones Industrial Average lost 530 points and 3 percent of its value, investors were particularly unkind to tech giant Apple.
The firm managed to ride a bull market to new heights in recent years, becoming the United States’ most valuable company during that time. But now, the pendulum is swinging the other way, and the market’s dramatic sell-off on Friday took a heavy toll on the iPhone and iPad maker.
Apple’s stock price fell $6.72, or a full 6 percent, to close at $106.02. In all for the week, Apple’s losses were 8.5 percent, making it the worst performer in what is turning out to be an ugly stock market, USA Today reported.
By the closing bell at Friday’s session, $158 billion in Apple valuation simply vanished. As the paper further reported:
The fate of Apple is more than a story of single stock. Apple is the the [sic] stock that captures if not personifies this bull market. It’s a top holding by individual investors – many of whom are new in the market. Its shares have benefited from the mobile data boom, which fueled much of the bull market. And Apple’s enormous profit margins and surging record cash pile are a testimony of the company’s ability to command premium pricing for its products – and consumers’ willingness to pay up.
But the same factors that made Apple so important during the bull makes it the key stock to watch as the market unravels. The Apple stock crash is reaching proportions that are downright ugly – breaching three important levels that quantify just how this isn’t your typical decline.
Three things characterize Apple’s massive plunge:
— For one, all of Apple’s 2015 gains have now been wiped out, as if they had never existed at all. That means that Apple has now plunged into the red for the year, taking away one security blanket which investors clung to as the rest of the market hemorrhaged. Shares have fallen 3.2 percent on the year, a steep decline after rising some 22 percent earlier this spring. And while Apple is better off than the market as a whole, which is off 3.8 percent this year, it’s nevertheless a rude awakening for shareholders (and the market in general). How quickly they rise – and fall.
— Because of the plunge, Apple stock is now entering a bear market. To demonstrate just how quickly the demise of Apple stock has occurred, shares are down 20.6 percent from their all-time high earlier this year of $134.50. That’s important because a 20 percent decline puts the stock in what is considered an unofficial definition of a bear market. More broadly, the market is only off 6 percent – significant, to be sure, but nothing close to Apple’s decline. Yet those figures represent just how stark Apple’s fall has been.
— Shareholders have just lost $158 billion, and that’s not small change. During the bull market, investors were ticking off how many billions that could be made from the ever-rising Apple stock price. In fact, bulls were predicting that Apple could become the first-ever $1 trillion company. Now, however, that seems like a distant memory. Losing more than $150 billion right off the top is a significant blow not just to investors who saw Apple as one of the safest of safe havens, but imagine what that now does to investor confidence over other industries once thought too sound to head south. The amount of wealth that Apple stocks have lost would be akin to wiping out companies like PepsiCo or Intel. It’s that big of a loss.
And there is this: Apple’s last big market growth region was China, where declining growth is decimating that country’s markets as well.
Sources:
