Apple (AAPL) diehards who keep saying the stock “will come back” are going into hibernation today.
Shares of the gadget maker closed down another 2.8% Friday to $105.93 — knocking the stock down 21% from its recent high of $134.54. The breathtaking decline not only puts Apple into a bear market – defined by a 20% drop — but has obliterated a staggering $160 billion in shareholder wealth from the top.
Just to put that into perspective, Apple’s $160 billion decline is larger than 477 companies in the Standard & Poor’s 500 are worth. A drop this big is the financial equivalent of wiping out the market value of entire companies like Pepsico (PEP) at $146 billion, International Business Machines (IBM) at $133 billion or Nike (NKE) at $111 billion.
Seeing such a massive decline in Apple carries more weight than a similar decline in any other stock would. Apple is still worth more than any other U.S. company — making it the most important stock in market measures like the S&P 500. Apple also is the most widely held stock by individual investors, says Sigfig, so the decline directly hits home.
Troubling signs pointing to weakening demand for smartphones continues to dog the stock. Analysts are cutting growth expectations for the fourth quarter — and even the first quarter — as they incorporate weaker demand. Despite efforts to diversify away from the mature smartphone market — Apple still gets a vast majority of its revenue and profit from smartphones.
A number of leading investment banks have been cutting earnings estimates on Apple along with price targets in some cases. Analysts on average now expect Apple to report adjusted quarterly profit of $3.24 a share in the fourth calendar quarter, down 1% from a month ago, says S&P Capital IQ. Estimates for profit in the first calendar quarter have been cut 2.4% from a month ago to $2.41.
Estimate cuts for Apple are very unusual. Estimates for fourth quarter calendar profits were boosted last December, as well as in March, June and November.
Apple stock is being treated accordingly. Shares are now in the red for the year — despite massive doubling in value by other big-tech companies like Amazon (AMZN) and Netflix (NFLX). Microsoft shares are up 16% this year. Shares of Apple are down 4.1% this year – which even lags the 2.6% decline by the S&P 500.
Investors are wondering how bad the broad market selloff will get. But for investors in Apple — you’re already in a bear market.
Apple’s decline from the high destroys more value than these companies are worth:
Company, symbol, market value in billions
Oracle, ORCL, $157.5
Citigroup, C, $157.4
Pepsico, PEP, $146
Philip Morris, PM, $138
Cisco Systems, CSCO, $135.6
International Bus. Machines, IBM, $132.7
Nike, NKE, $111.