Apple stock drops, but don’t panic: this usually precedes huge earnings growth
Not so fast. Even though Apple just lost an Intel of valuation over the past couple of weeks, that might be more of an unsurprising reaction from investors. Asymco’s Horace Dediu studied 13 cases of Apple stock going bearish starting with the iPod launch in October 2001. Interestingly enough, a pattern emerged.
“Every dramatic drop in share price was followed by a surge in earnings growth,” Dediu concludes. For example, when the iPod launched, Apple stock was already down around 70% and then continued dropping by another 20%.
It could all be summarized in the lack of certainty from investors. Summing it up, investors tend to push the stock gradually up when confident, but pull it down dramatically when not.
A pithy way of putting it is: No news is good news. Good news is bad news.
When a product is understood the stock is mildly desirable. When a new product appears the future is hazy and the stock is undesirable. But that haziness hides potential but up and down. New products is what innovators produce. Bizarre new products is what disruptors produce.
In other words, the paradoxical observation in the chart above of “the more drama in the market, the more success in the marketplace” makes sense when inverted,” according to Dediu.
We don’t know whether this time around the same pattern will hold. What we do know, is that panic is probably not the best reaction.
8. Commentator (Posts: 2469; Member since: 16 Aug 2011)
If I had a nickel for every time I've seen that exact same post on PhoneArena, I'd have a sh*t-load of nickels.
16. Nadr1212 (Posts: 741; Member since: 22 Sep 2012)
Exactly, how is the dropping of apple of another 20% wen it already was 70% down a surge in earnings growth?
39. darkkjedii (Posts: 12406; Member since: 05 Feb 2011)
When was it 70% down? According to u it should b about 90% down now. Apple should b closing its doors any day now huh? What a joke
15. whysoserious (Posts: 317; Member since: 20 Jul 2012)
There's one thing that this researcher is forgetting; Apple has stopped innovating on its devices like they used to. So yes, iFans, it's time for you to panic.
31. QWIKSTRIKE (Posts: 909; Member since: 09 Mar 2010)
It very well may be, the last article P.A. mad about Apple I predicted this and they talked about Elliot waves, and I got thumbed down, and I said when Apple fails to go higher remember my post. Well it's time to remember that post because I said Apple must hold $585.00 or see targets of $525.00 or $517.00. I also said that the SPX would see 1380's also and to go defensive if you are not by eyars end too.
If Apple fails those targets $486.00 could be next. Apple will bounce but if earnings are weak could continue into s spiral fall. It will bounce by Xmas I think but how high is the question. At any rate as I said before no dip buying in a wave 5 top!
44. OptimusOne (Posts: 694; Member since: 22 May 2012)
time to sell my several hundred shares of apple stock I bought a long time ago before apple fails even more. well atleast i bought the stocks when they were
45. OptimusOne (Posts: 694; Member since: 22 May 2012)
who knows. this might be apple's wake up call for them to do something different
2. KParks23 (Posts: 459; Member since: 13 Oct 2010)
Agreed this is not something they will bounce back from.. Stocks that size pull back 30-60$ before they make another big move... Apples stock is plummeting 100s of dollar not good
13. -box- (Posts: 3866; Member since: 04 Jan 2012)
Agreed. Apple doesn't have another device as "appealing" and "unique" as the ipod (I say that because not everyone found it so, and it wasn't the first mp3 player, just the most popular) to be known in the pipelines, and they're releaseing the same regurgitated stuff with marginal improvements each time. They were overinflated before, and investors are done riding the wave. Were I a stockholder, I'd have sold while it was over $700 or in the high $600s. I fully expect it to get to the $200 level and stay there for a while, probably decreasing if apple stays with its current unimaginative gameplan.
33. QWIKSTRIKE (Posts: 909; Member since: 09 Mar 2010)
Apple is way under the 200 day simple moving averages that means it is under 6 months of average pricing. Because of this funds have to sell all positions unless they buy hoping for a rise. After the 50 day sma most funds dump a stock as I mentioned in the last P.A. article.
Some one said it was time to dip buy and I said he was crazy and got thumbed down. Where are those people that thumbed me down. I hope they were not stupid enough to dip buy then ROFL
36. QWIKSTRIKE (Posts: 909; Member since: 09 Mar 2010)
Again the writer of this article is clueless, as I mentioned the last article a wave 5 top is the beginning of the end of a stocks run up. Wave 5 top is an omen of doom. You will see that Apple may bounce but not like it did in the past if this is indeed a wave A of the wave 5 top. A waves correct B waves counter correct A waves then C waves just plain out fail into the abyss.
3. PAPINYC (banned) (Posts: 2315; Member since: 30 Jul 2011)
Yes little §h€€p, be not diSmayed;
for, our Apple is cracking and you will not get paid.
Through pits and through falls, iCommand you to stay;
fear not little §h€€p as, uMight not get layed.
10. Commentator (Posts: 2469; Member since: 16 Aug 2011)
I'm not sure who's worse: APPLE.ROYALLY or this guy.
12. PAPINYC (banned) (Posts: 2315; Member since: 30 Jul 2011)
Oh, don't get your panties in an uproar....!
34. XPERIA-KNIGHT (unregistered)
hilarious as hell man :)
4. gothicheart (Posts: 82; Member since: 17 Oct 2012)
this is the most biased news I have heard so far. first you tell us the real news, apple stock dropping. then you tell us something that is your opinion. If that is how good you can predict, why do we even bother reading business newspapers and magazines. So now, phonearena is also a stock expert, tsk tsk. At least half of it was real, apple is falling...
5. MeoCao (unregistered)
There's no analogy with the cases.
Before Apple stocks went down b-c the market did not believe in Apple's new products which turned out to be huge success.
This time there's nothing new from Apple but all negatives like organisation disruption, bad press, lack of innovation...
Best days are behind Apple and from now on it's now down and down.
9. Commentator (Posts: 2469; Member since: 16 Aug 2011)
The fact that "don't panic" is included in this title means that either PhoneArena is oblivious to the fact that 99.8736% of its readers are rabid Apple-haters, or that they understand this and stated it ironically. I wonder which it is...?
11. Aeires (unregistered)
I'm just curious to what event is going to bring this $1000 per share at the end of the year. A ton of people still think that's going to happen, even though their stock is going in the opposite direction. It's halfway through the last quarter already, won't take long to see which side is correct with their predictions.
18. -box- (Posts: 3866; Member since: 04 Jan 2012)
Wishful thinking. Probably the same people predicting $1K shares are the same folks who bought Enron and were responsible for the dot-com bubble
21. Aeires (unregistered)
For me, I thought the Mini was going to be a rebound moment. When the prices were released, it plunged even further and no sales report for it or their other products have helped. I think little by little, people are seeing you can get better or as equally good products for less money. The golden era seems to be gone for Apple, we'll have to wait and see if this is just a transitional moment though.
17. ilia1986 (unregistered)
Why should I panic? I should celebrate!
27. darac (Posts: 2156; Member since: 17 Oct 2011)
That's what I wanted to post haha.
Enough of the Apple bubble.
Don't get me wrong, people. I don't blindly hate apple, they can make darn amazing products but that doesn't make them any less corrupted and arrogant
19. jmoita2 (Posts: 930; Member since: 23 Dec 2011)
Exorbitant stock prices built on nothing but hype always crash horribly. Ther is always opportunity to make a lot of money on the upside, riding the irrationality of investors and speculators. But one day reality hits, and the whole house of cards comes crashing down as everyone runs for the door at the same time. Apple, watch out...
20. webOSlove (unregistered)
"Super successful " iphone 5? If it was super successful, this wouldn't be happening. So bias.
22. gwuhua1984 (Posts: 1237; Member since: 06 Mar 2012)
The truth is, the stock dip after they make new announcements, but stock soars once the new product ships. In this case... nothing new is being announced and what's been announced has already been selling. This is something different than the usual stock dip that we see from Apple.
23. darkkjedii (Posts: 12406; Member since: 05 Feb 2011)
It's time for apple to push the envelope like Samsung has. Apples recent hires, and fires indicate change is needed. I look forward to seeing what Apple does in 2013 because it is time for a shakeup at apple. This is from a primary apple user.
30. PapaSmurf (Posts: 8841; Member since: 14 May 2012)
Well looks like you're going to be waiting for a long time at the rate of change they're going at the moment.
Samsung continues leading the mobile market in the right direction. Apple, not so much.
This is from a primary Samsung user.
32. darkkjedii (Posts: 12406; Member since: 05 Feb 2011)
Well we'll see in the mean time I enjoy what I got
24. shamataa (Posts: 202; Member since: 07 Dec 2011)
"don’t panic: this usually precedes huge earnings growth" yea right maybe not huge but some b/c all of their stuff are way too expensive for us average people. Apple seems to think everyone on earth is rich so they charge us with so much that only rich people with rich jobs can afford. They should price for a budget not over so much that 1 high school can't afford.
25. jmoita2 (Posts: 930; Member since: 23 Dec 2011)
"don’t panic": The Titanic's captain's exact words right after they hit that now notorious iceberg...lol.
28. darkkjedii (Posts: 12406; Member since: 05 Feb 2011)
Apple is and will b just fine. Calm down people
46. webOSlove (unregistered)
nobody was getting frantic, we were all cheering.
26. mydi.maus (unregistered)
apple is king!
29. lyndon420 (Posts: 1782; Member since: 11 Jul 2012)
Apple is beginning to lose more court cases than it wins. If I was invested in them i'd be pulling out. An innovative company spends their money on creating great products, not constantly wasting the courts time.
37. Friendlysky (Posts: 54; Member since: 04 Jul 2012)
Don't worry just be happy to lost you share like big rival? If you dont sell now you 401k might have to say good byeeeeeeeeeeee! I never worry because I don't own Apple share. I invest in a new products.
40. downphoenix (Posts: 2382; Member since: 19 Jun 2010)
panic? you guys need to know about your posters here. Most people here aren't panicing, they're celebrating!
41. MC1123 (Posts: 1247; Member since: 12 Nov 2012)
so im hoping apple will realize that all the profit that they'll get will not help them to be on top! coz people will just look for alternatives to what they are offering!!!
im hoping apple will realize this!
42. sudbury78 (Posts: 129; Member since: 12 Jul 2012)
Another apple bashing article equals hard little FANDROIDs.
43. InspectorGadget80 (Posts: 6689; Member since: 26 Mar 2011)
Why the hell should we panic if APPLE stock drop? it shows u how much phonearena cares bout Apple. I'D RATHER SEE APPLE STOCK PLUMMIT once everyone stop buying there products n realize its the same P.O.S. every year