There seems to be two trends in the market that everyone is talking, tweeting, posting, and blogging about. These two trends are on opposite ends of a broad spectrum, and they involve two of everyone’s favourite and least company. The companies are Apple Inc. (NASDAQ:AAPL) and Facebook Inc (NASDAQ:FB), and the trends are the opposite directions in which their stock is moving.
Apple Inc. (NASDAQ:AAPL) is continuously hitting new highs on a daily basis. The stock is currently trading at $655.32 at the time of this writing. This seems to be in line with analysts, who have said that the next quarter could be one of Apple Inc. (NASDAQ:AAPL)’s best ever, due to the release of the new iPhone5 and the launch of the iPad mini. These two factors, along with the indications that Apple Inc. (NASDAQ:AAPL) is developing the Apple TV, a set top television which could stream live cable programming, have boosted shares to an all time high. Even the lawsuit, against their rival, Samsung Electronics Co., Ltd. (KRX:005930), has not been able to suppress the rise in price.
These rumors, which have been written on nearly every tech blog and Twitter page, have fueled the fires for Apple Inc. (NASDAQ:AAPL), and their stock price has gone through the roof. Those who bought Apple and held onto it, since the early days, are now sitting pretty, and are most definitely satisfied with their investment. On the flip side, many of those who thought Apple was a poor choice, are probably kicking themselves now.
The opposite trend in the market is seen in Facebook’s stock price. Ever since the mangled IPO in May of this year, the company stock has plummeted in price. It is currently trading at $19.01, and that is less than half of its IPO price of $38 per share. Since the opening price was closer to $45 a share, investors are down about 58% since the day of the IPO. The company has faced serious problems in making the most out of the mobile users for its platform. They have had a tough time being able to find a way to make profitable advertisement advances on the mobile web. On the other hand, Apple Inc is up over 20% since May the Facebook IPO.
These two trends are begging for attention, as we watch the market today. There are a couple of questions that pop into mind.
The first question is, how did Apple get to do so well? The answer is simple; they offer top of the line products and great customer service. Their products turn a handsome profit for the company, which in turn, allows them to afford more research into the tech world, to develop better products. During the Apples vs. Samsung lawsuit, which we have brought you continuing coverage on, some facts regarding Apple’s profit margins were released. According to NYTimes.com author, Nick Wingfield, Apple makes a profit of $558 for every iPad that is sold. While this may seem like a lot of profit, when you consider how much money is spent in research and development of these gadgets, it really isnt. Apple had a profit margin in the tablet world alone, which was higher than Samsung, by $98. These margins are a big contributor to the success of the company.
The second question we ask is, how did Facebook flop so hard? Facebook is a household name, and nearly everyone in America, over the age of 13 has used, or still does use Facebook as a means of connecting with family and friends. The social network is the largest in the world, and is available in many countries and languages. So, if they have such a huge user base, how did they flop?
The answer to the above question is also a simple one. Facebook has remarkably poor customer service. In some cases, it has taken them years to resolve issues, such as timely deletion of photos fom servers, as we reported in a previous article. Facebook’s customer service has more negative comments in reviews, than positive. Sometimes, these add up to be 99.95% worth of dissatisfied users, vs. .05% of happy people. You can not run a business with bad customer service.
The second way they flopped, was in waiting too late to monetize their mobile platform. Most of Facebook’s, massive user base have smartphones, and thy use these to keep up with Facebook. However, Facebook has failed to advertise in a way that earns revenue on the mobile apps. They have also allowed their gaming to be negatively impacted, when they altered the way their games were set up, and in the process, they hurt their partner, Zynga Inc (NASDAQ:ZNGA), as well.
Now, I am just curious regarding these two companies, and the complete opposite trends their stocks are taking on in the market. As Facebook falls ever lower, and Apple climbs higher, I want to know what the relationship between the two consists of. I think, it just may be possible that Facebook shareholders have seen the loss they are incurring, and maybe, just maybe, they are jumping ship to invest in Apple. While this may not be the case, I am still curious about it. Facebook seems to be a lead weight in the market, while Apple has surfaced as a leader and possible lifeline for investors. It would be interesting to note who sold shares of Facebook in the last few days, and also bought shares of Apple. In the end, this is likely a case of correlation. However, perhaps there is a bit of causation as well in this case.
What do readers think?