Apple (AAPL) diehards who keep saying the stock "will come back" are going into hibernation today.
Shares of the gadget maker Friday are down another 1.3% Friday to $107.61 — knocking the stock down 20% 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 $150 billion in shareholder wealth from the top.
Just to put that into perspective, Apple's $150 billion decline is larger than 475 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 $145 billion, International Business Machines (IBM) at $133 billion and 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.
S&P Capital IQ, USA TODAY
Apple's decline from April puts it into a 20% bear market - and is more severe than the selling of the broad market.
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.
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