218 billion dollars you say… Poof! It’s gone.


The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.
Mohit Kharkwal, MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur
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Most valuable tech company of the world, Apple, was again making headlines this week. But the poster child of silicon valley had only bad news to offer. Owing to the sluggish demand of iPhone lineup, investors are getting nervous and situation is only worsening due to underwhelming performance of Apple watch and the iPad lineup.
The only star performer of Apple lineup this financial quarter has been its MacBook line. According to Gartner, Apple is the sole manufacturer that saw positive shipment growth amid worldwide decline in PC segment. Apple also broke into Gartner’s list of top five worldwide PC manufacturers for the first time.
However big bulk of Apple’s revenue comes from iOS devices and investors are not happy with the growth they are observing. Its performance in emerging markets like India and China is tapering off and it is facing tough competition from the industry in America and Europe. These are major factors leading to fall in Apple’s share prices by $2.47 to $97.05 (Friday figures). Share price of $97.05 is 28% decline from the market high of last year (May 21,2015). Adjusting for the stock buybacks, this fall has wiped out 218 billion dollars in market value. This is more than 480 stocks in the S&P 500 combined.
However such wide dips in Apple’s share prices are not uncommon. In 2013, price fell over 40% over the period of six months taking with it almost 300 billion dollars. Many analyst attribute these fluctuations to Apple being overvalued. So now it remains to be seen how soon the investors will settle at the right price and what it will be.
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