An article on Business Insider claims to know the reason for the decline in AAPL over the past couple of weeks. The author posits that the recent drop (which only started a week or so ago) is due to the uncertainty about who would replace Steve Jobs, the rise of Android in the mobile market, and the lack of a phone announcement in June. As you can guess, I have a problem with this logic.
First, the issue with Steve has been around for a few years now, and no new announcement or rumour regarding Steve’s health has appeared. So to claim that something that has been percolating for years, with no recent news or noise, is suddenly responsible for a recent drop in stock seems suspect. I don’t buy it. If something had come out about Steve taking a turn for the worse, or appearing in rough shape at some event, then maybe I could buy this logic. But this one sounds too trite and too convenient and is without any sort of evidence.
Second, the issue with the ascendency of Android and it taking the lead in some markets has also been around for quite some time, going back a few months. Again, if a recent survey or research piece had come out, then I could buy this argument. But that hasn’t been the case. Further, this type of news usually causes a dip for a few days, not for a couple of weeks. Again, with no activity to support this, I don’t find this explanation plausible.
Third, the lack of a phone announcement in June isn’t exactly recent news. The WWDC keynote was two weeks ago. Everyone who follows Apple knew that any hardware announcements were highly unlikely. After the WWDC keynote, Apple’s stock took a significant bump upwards, and did so for a few days. Had investors and analysts seen the keynote in a negative light, specifically because of no phone or other hardware, then that would have come out after the keynote, and would have likely been reflected in a price decrease, not increase, in the days after the event. That downward pressure would have have waited a week or more to appear.
So, the so-called “explanation” is wanting in both logic and evidence. Why could it be dropping? Well, recent announcements by RIM, specifically about expecting few unit sales, could be seen as a general slowdown in the mobile devices market. Other parts of RIM’s recent announcements (less than expected results, layoffs) would presumably have helped Apple, Google and HP, and they did for about a day. But, overall concern about a slowdown in the market, combined with recent rumblings about the potential for a stock market correction in conjunction with a possible economic slowdown, may be a bigger factor. When consumer spending is off, things like mobile devices often take a hit because people stop buying them first. Google and HP have also been down recently, as was RIM even before their announcements. There appears to be some pressure on several companies that have or product mobile devices, so this may be more than just an Apple issue.
Guesses as to why a stock is moving one way or another are generally that: guesses. But those guesses should at least contain a shred of relevant or recent evidence, and the better attempts at explanation usually do. I’ve been working in capital markets now for nearly 18 years, and one thing I’ve noticed is that markets anywhere in the world react to short-term news. They rarely, if ever, react to long-term trends. The recent drop in Apple stock has been just that: recent. From what I’ve seen, it appears to be more of an issue in the mobile technologies sector, and not something specific to Apple.