Not too long ago Apple was the bell weather for the overall stock market. If Apple had a subpar earnings report we were “headed into a recession.” If Apple exceeded earnings estimates on the top and bottom line the entire tech sector was higher by 2% or more the next day. That no longer seems to be the case. There has been a disconnect with the health of the overall market and the stock price of Apple. Back in April of 2012 I asked the question “Has Apple Peaked?” That might have been an early prediction as Apple peaked in mid September around $700 a share. Since then, it has been all down hill.
Apple Stock No Longer Leading the Market
For much of the recovery from the “Great Recession” Apple lead the way. It seemed almost every single earnings report was a work of art. There were many earnings reports that pushed Apple up 7% and 8% after hours. The iPhone was selling better than ever and the iPad was going to revolutionize the way we consumed content on the Internet. That was all find and dandy until a few competitors came along – namely Android.
In September 2012 Apple reached $700 a share and some analysts were predicting $1000 in the near future. I was skeptical. I have repeatedly said that Apple would struggle without the guidance of Steve Jobs. That seems to be the case today. Since hitting $700 Apple is down about 38% to $430 a share. In that same time frame the Dow Jones Industrial Average is up just over 9%. Even the tech heavy NASDAQ is up over 3%. This is a clear indicator that Apple is no longer leading the way.
Where Does Apple Stock Go From Here?
This is a tough question to answer. I think most people can agree that there is not nearly as much excitement about new Apple products being released. In fact, there have been talks that the only real innovation of the iPhone 5s will be the different colored models. At one point there is only so much you can do with a smartphone. Tablet sales have been good but the number of Android tablets on the market have hurt the total sales of iPads. Add to that the eReader expansion into tablets and the iPad really has a battle on their hands. Especially when it comes to the price point.
If Apple is counting on iPhone sales to drive revenue I think there is more downside potential for this stock. I have no idea how low but iPhones are simply not selling the way they did in the past. That said, the stock is down 38% so how much further can it drop? No matter how much I dislike the closed Apple ecosystem there will always be individuals who want to purchase a smartphone that is easy to use. I cannot argue that an iPhone is ready for use straight out of the box. The learning curve is not nearly as bad as it is with a newer model Android phone.
For the first time in several years the Apple stock does not matter to the overall market. This stock price does matter to any shareholders or employees of the company. It will be interesting to see what retail company takes hold of the market and starts to lead the way. That may be Google, Amazon or even Facebook (I highly doubt it!) but only time will tell. Do you think that the Apple stock can recover? Is $700 a share possible sometime in 2013 or 2014?…