Apple stock drops, but don’t panic: this usually precedes huge earnings growth

Apple stock drops, but don’t panic: this usually precedes huge earnings growth
Apple stock is crashing. The stock suddenly looks bearish despite the super successful iPhone 5, the new iPad mini and upgraded iPad. Is it time to panic?

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.

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.

source: Asymco



1. chunk1x

Posts: 248; Member since: Jun 25, 2011

The beginning of the end for Apple.

8. Commentator

Posts: 3723; Member since: Aug 16, 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.

14. mas11

Posts: 1034; Member since: Mar 30, 2012

Perfect avatar for that post haha

16. Nadr1212

Posts: 741; Member since: Sep 22, 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: 31328; Member since: Feb 05, 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: 318; Member since: Jul 20, 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.


Posts: 1459; Member since: Mar 09, 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!

38. Friendlysky

Posts: 54; Member since: Jul 04, 2012

Don't worry be sorry! Make my DAY.

44. OptimusOne

Posts: 694; Member since: May 22, 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: May 22, 2012

who knows. this might be apple's wake up call for them to do something different

2. KParks23

Posts: 729; Member since: Oct 13, 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: 3991; Member since: Jan 04, 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.


Posts: 1459; Member since: Mar 09, 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


Posts: 1459; Member since: Mar 09, 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.


Posts: 2315; Member since: Jul 30, 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: 3723; Member since: Aug 16, 2011

I'm not sure who's worse: APPLE.ROYALLY or this guy.


Posts: 2315; Member since: Jul 30, 2011

Oh, don't get your panties in an uproar....!

34. XPERIA-KNIGHT unregistered

hilarious as hell man :)

4. gothicheart

Posts: 83; Member since: Oct 17, 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.

6. Scientist

Posts: 19; Member since: Oct 22, 2012

Rotten apple

7. JonBjSig

Posts: 176; Member since: Nov 17, 2011


9. Commentator

Posts: 3723; Member since: Aug 16, 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: 3991; Member since: Jan 04, 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: Oct 17, 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: Dec 23, 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.

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