Speculation over the drop in Apple share prices has been a hot topic over the last few weeks. After record highs in 2012, with shares at just over $700, prices have dropped by a massive 34% to around $450. While shares soared during the eagerly anticipated iPhone 5 launch in September, investors have been somewhat reserved in recent months.
What They’re Saying
Everyone has a theory about the price crash. USA Today points to Apple’s slowing momentum, with a number of brokerage firms cutting their share price targets dramatically. Forecasters have also estimated a drop in Apple’s annual profit. Despite the drastic fall, the majority of analysts maintain buy ratings, though this may well change over the course of the financial year.
Gizmodo doesn't see falling prices as Apple's biggest problem. They believe the ‘stabilisation’ of the market is more significant to the company's fortunes. With the reported cut to orders for iPhone parts, indicating a slowdown in production, Apple must continue to create new marketplaces. While they currently dominate the digital music market, with a strong grasp on the mobile and tablet markets, they need to go on innovating.
If Apple can't achieve that, then it may end like Sony. A great company, with good products and good design, but just another company fighting to sell phones, tablets and computers.1
Why Has This Happened?
One thing that most people agree on is that Apple have achieved audience saturation. As the number of iPads and iPhones sales increase, the amount of buyers for their products decrease. And with rival companies catching up to their technology (and beginning to improve on it), some think there needs to be further growth and evolution.
Many still feel that the passing of Steve Jobs continues to impact Apple. He was widely recognised as the driving force behind their innovation. While they will claim success for the iPad mini, a lot of consumers are not seeing the progression they are hoping for.
Can Apple Turn it Around?
E-Commerce Times suggests that to turn their fortunes around, Apple must reinvest in innovation. It is estimated that the company has a spare $130 billion dollars at its disposal, and some industry experts would like to see this invested in research and development. Perhaps with more focus on the Apple Ecosystem, the anxiety of investors will diminish?
On The Bright Side
As Business Insider points out, Apple is still expected to grow, and is still profitable to the tune of $40 billion a year (not bad for a company in crisis?). Commenting on the amount of wiggle room the technology giants have with regards to stock buy backs and dividends, Business Insider agrees that innovation is key.
I am not suggesting that Apple's stock is suddenly going to rocket back to $700. For that to happen, Apple would have to release another product that is a quantum leap over the competition.2
The Next Step Is Crucial
Can Apple continue to innovate, or will they have to start playing catch up with other technology giants?