/// Apple Investors Are Still Wusses

November 17, 2012  |  All Things Digital


After a meteoric rise, Apple’s stock is falling back to earth. At market close Friday, Apple’s share price had slipped to a little over $527. This after tumbling to $505.75 Thursday — some 28 percent off its September high of $705. That decline has shaved about $170 billion off the company’s market capitalization, which was headed toward $660 billion just two months ago. A nasty plunge, and an oddly timed reversal of fortune for high-flying Apple, which is headed into the holiday season with one of its strongest product lineups ever: A new iPhone, iPad, iPad mini, new iPods, and refreshed Mac desktops and portables. What’s behind the slump? It could be the overall markets, which have taken a vicious beating recently. It could be persistent supply chain issues that have to some extent hamstrung Apple from meeting robust demand for some of its devices — the iPhone 5 is still showing shipping times of two to three weeks on the Apple Store nearly two months after first going on sale; the new iPad mini is also backordered. The iOS Maps debacle and a high-profile management overhaul may have also shaken investor faith in the company. It could be that concerns over the “fiscal cliff” are weighing heavy on Apple as well. A number of hedge funds that count the company among their top holdings have been unloading some of their Apple shares . As David Greenberg of Greenberg Capital told CNBC, “Someone yelled ‘fire’ in the theater where the hedge funds were safely booking their year-end profits — and as traders do, they will trample you trying to be first to get to the exit.” Meanwhile, individual investors are too timid at this point to rush in and buy up the stock the funds are selling off. Another possible factor: Apple is losing its appeal as a growth story as it morphs into a classic blue chip value story, as Bernstein analyst Toni Sacconaghi recently theorized. “We believe that Apple is transitioning from a hyper-growth story to a more traditional, high quality branded company story,” he recently told clients. Certainly possible. Apple did pay a quarterly dividend last week. And then there’s that litany of other dubious concerns — the iPhone market is nearing saturation; innovation at Apple is dying; gross margins are declining; “Tim Cook is no Steve Jobs”; and so on — that while generally unfounded, can weigh on Apple’s share price. In truth, it’s probably a combination of all these things — that clichéd “perfect storm” situation that’s so often blamed for volatility like this.

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Apple Investors Are Still Wusses


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