Apple Inc. (AAPL) Stock Below $400: Is The Market Over Adjusting?

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Over at today, Ben Lovejoy took a look at Apple Inc. (NASDAQ:AAPL) shares, and what putting the price below $400 really means. The article is quite reassuring for Apple shareholders nervous about falls in the share price, but there is a major caveat. The market can value Apple Inc. (NASDAQ:AAPL) at whatever price it wants despite the underlying basics.


The problem is that the market is nervous about Apple Inc. (NASDAQ:AAPL) in general. Lovejoy breaks the angst down into three major parts, margins, microchips and Mr. Steve Jobs. The first of these is the most worrying for investors. Its 2012 product launches, particularly the iPhone 5 and the iPad mini, caused a 6 point compression in the firm’s gross margin.

In the last quarter that margin stood at 38.6 percent, an amazing number in a hyper-competitive industry, and one that investors must be certain will come down in the years ahead. Angst about how fast this is likely to happen is driving worries about the company’s future.

On the microchips front, the news that drove the recent slide in the share price of Apple Inc. (NASDAQ:AAPL) concerned problems at a plant that supplies Apple with its chips. The plant said that its revenues were low because it had inventory problems. The market took this to mean that Apple Inc. (NASDAQ:AAPL), the company’s biggest supplier, would record low iPhone sales in the first quarter.

As Lovejoy points out, nobody is really sure if that firm is where Apple Inc. (NASDAQ:AAPL) gets most of its chips from these days. Information about Apple’s major suppliers is generally kept secret. The company may have moved on, resulting in increased inventory at the factory.

The third factor, Mr. Steve Jobs, is a narrative one. The story puts Jobs in the role of the hero that goes though a struggle and emerges triumphant to lead his people to safety. When the hero leaves his people there is no one left to save them. At Apple Inc. (NASDAQ:AAPL) this means that the founder was the real innovator and everybody else is just a manager, unable to add real wealth.

The problems with Apple Inc. (NASDAQ:AAPL)’s share price are more varied than these three, but it is important for lovers of the company to recognize that the troubles with the stock price may not be based in reality, or even in numbers. Much of the movement is narrative, and Apple Inc. (NASDAQ:AAPL) has offered little to counter it thus far.

On today’s market Apple Inc. (NASDAQ:AAPL) continued to fall on today’s market. At time of writing the Cupertino firm’s stock price had fallen almost 2 percent on the day’s trading.

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