Apple Stock Price Fallout - Whats Really Happening Here?

The huge drop in Apple’s stock price has sent shock and Awe through the investment community. On one hand, you have the Apple bulls calling foul. Interestingly, this group consists of Apple fanbois, most of whom do not own the stock but have kind of vested interest somehow.

On the other hand, you have the Apple bears, who is currently celebrating Christmas in January – given the stock performance, screaming I told you so.

So, where did it went wrong for Apple?

Some might point the finger at Wall Street Journal and Nikkei reports published on January the 13. According to their report, Apple Inc. has cut their orders for components for the iPhone 5 due to weak demands. The Nikkei report stated that the order has been half from 65 million in the previous quarter.

Consequently, Apple’s stock has fallen from $530 to $485 at the close of trading today.

Many came out to condemn the style of reporting hoping to reverse the trend.

Writing for BGR, Tero Kuittinen talked about the strange math of Apple’s Alleged massive iPhone 5 order cuts:

Perhaps the weirdness of the math is why the current version of the WSJ article no longer cites the 65 million unit figure. Sometime between Sunday at 8:00 p.m. EST and Monday at 7:00 a.m., the Journal decided to drop the number from its article. But if the 65 million number is not right, is the estimate for halving March orders correct?

Neil Hughes of AppleInsider reported that many analysts believe that there is nothing to see here, iPhone 5 demand remains ‘robust’:

Wu joins a growing chorus of market watchers who believe any order cuts for iPhone 5 components are not representative of consumer interest. Mark Moskowitz of J.P. Morgan said the reports are just “more noise” that will prompt investors to overreact, while Maynard Um of Wells Fargo said any cuts are actually “not news.”

Despite these bullish reports, Apple’s critics and bears feel justified with the Apple’s current predicament.

Bert Dohmen wrote:

Here is the recent history of my observations:

As early as late August 2012, I wrote on twitter.com that the boom in Apple was coming to an end because the new CEO had shown a trend of “disappointment.” Every new product since then was less than expected. Steve Jobs always delivered more than expected.
Apple hit its all-time high of $705 on Sept. 21. Six days later, I wrote on twitter that my downside target was $520. That seemed outrageous, but it was hit about three weeks later on Nov. 16.
On that day, I predicted a rally to $581. The rally actually hit $589, just a bit higher. Thereafter, I predicted that the next decline would go to $422

Even one of Apple’s biggest advocate Jay Yarow has been left scratching his head:

Apple has gone from being a sure-thing rocketship to a train wreck, as far as stocks are concerned.

Some people want to cry “stock manipulation,” but the stock is down 30% since the end of September. It’s hard to totally fool the market. Something is amiss with the company.

At the end of the day, which one of these camps is correct in their analysis of Apple’s current situation. My guess is that Apple’s conference call on January 23 will shed some light.

In my opinion, they isn’t a lot wrong with Apple’s fundamentals for long term investors, however, the harsh reality of trading is that price is ‘King.’ And currently Apple’s stock price is causing many investors sleepless nights, which is not a good thing.