Exactly one week after peaking at over $623 a share, Apple's stock appears to be in free fall having sunk for five consecutive days. In total, Apple's down 7 percent since that apex. And the Cupertino kids are bringing everybody with them. By the end of the day on Monday, Apple had slipped 4 percent closing at $580, and Nasdaq on the whole finished 23 points down closing at 2,988.
With Apple's second quarter earnings report due out on April 24, tech investors and observers seems nervous about this year's all-star stock, but it's not completely clear why the company lost billions in market capital in so little time. Analysts are reading the tea leaves, nevertheless, and we've done our best to sum up the top four theories:
- Investors' hopes are too high. As we mentioned, a new earnings report is due, and there's some anxiety that shareholders are too optimistic, says Street Insider. It's not a terribly crazy idea, since Apple stock has been performing superheroically so far this year. Nevertheless, the increasingly sky-high earnings estimates are becoming increasingly difficult to meet.
- Carriers are sick of paying iPhone subsidies. Verizon is the first of the major carriers who's announced a new fee for iPhone upgrades. It's only $30, but it sends a message. Obviously, iPhones are popular, and they're also Apple's biggest seller. However, much of this is thanks to the wireless carriers who front a large portion of the cost of the device to consumers when they sign up. If other carriers follow Verizon's lead, there's a good chance fewer people will opt for iPhones over less expensive Android smartphones.
- A cheaper iPad might be on the way. We think this sounds like great news! Wall Street types, however, do not. A mid-range iPad could squeeze Apple's margin on the popular tablet meaning, of course, shareholders would lose. There's similar concern that demand for the iPad is simply waning. Either way, we won't know for sure until Apple makes its next iPad announcement.
- All this bubble speculation is finally becoming a reality. Inevitably, we have to consider that Apple's -- and Facebook's and Zynga's and LinkedIn's and Instagram's -- meteoric success is pumping air into the rumored second Silicon Valley bubble. Plenty of people think that it's mostly been inflated by social media companies, but it's worth considering that even blue chip giants like Apple are a part of the problem too.
Right now, it's probably best to just wait and see. Everybody freaked out at the end of March, when Apple had a flash crash, dipping 9 percent in a single day before recovering completely. This time around, it could just be another scare, a high stakes stock having a hiccup before growing even more. "Every living thing, including Apple, needs to stop and breathe," Rick Bensignor, chief market strategist at Merlin Securities, told The Wall Street Journal at the end of the day on Monday. If Apple's a living thing (it's not, is it?), maybe it just needs a little rest.