Apple Down 180 Points From Its All-Time High





Apple Logo - Question Mark - IllustrationAnother day, another red session for Apple Inc. (AAPL)

Apple closed down 11.26 points (-2.10%) today to close at $525.62. Following today's loss, Apple is now down over 25% from its all-time high of $705.07.

Apple was trading at over $700 less than two months ago, and suddenly it seems as though everybody is dumping their shares at the same time. What gives? Are Apple's best days behind it?

There are several theories as to why shares of Apple have been so aggressively sold over the past two months. The leading theories:

1) The "fiscal cliff". Potential tax changes in 2013 (capital gains tax, dividend tax, etc) have many investors evaluating their portfolios and planning ahead. With capital gains and dividend taxes both set to increase in 2013 (unless Congress says otherwise), many investors are unloading stocks that have performed well over the past number of years and/or pay dividends. Apple has obviously performed extremely well in recent years, and the company also pays a dividend.

2) Weak economy. This ties in to the first point regarding the "fiscal cliff". The Congressional Budget Office has already warned that the US economy could tip into another recession if the "fiscal cliff" is not avoided. With the contentious Presidential election now behind us, many are wondering if the Republicans and Democrats will be able to fashion a deal over the next few months. Both sides have been drawing lines in the sand. The US economy is not very strong right now, and the "fiscal cliff" could easily throw the country into another recession. This would definitely have an impact on companies such as Apple.

3) Global economic worries. The Eurozone is now in a recession once again. Worries continue to swirl about China, which is a key market for Apple and its global expansion plans. Many of the world's largest economies are on fairly unstable footing right now.

4) Competitive concerns. Some investors are worried about products such as Google's Nexus 7, Microsoft's Surface or Amazon's Kindle Fire, and the impact that they may have on Apple's bottom line.

5) The upgrade cycle. Are Apple's loyal customers getting tired of the perpetual upgrade cycle? Are Apple's loyal customers holding off on buying the newest iPhone or iPad because there is always something new that is just about to be released? Why buy the iPhone 5 when the iPhone 5s will surely be released in just a few months? Why buy the new iPad Mini when the iPad Mini 2 is surely just around the corner? I have heard from several loyal Apple customers that say they are tiring of the continuous upgrade cycle and are suffering from "upgrade fatigue".

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In the end, Apple has been on an absolute tear over the past few years, and has executed almost flawlessly, even in the face of the passing of Steve Jobs. Apple's stock has basically gone straight up over the past few years, so it shouldn't be a surprise to see it pull back.

The big question: is this merely a pullback, or are Apple's best days (especially for shareholders) rapidly vanishing from view in the rearview mirror?




Filed under: General Market News

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