Apple is no longer worth a trillion after tech stocks take a beating

Apple’s value has fallen by more than £220 billion over the past few weeks. While some of the problems are unique to Apple, other technology stocks have also taken a beating, including Facebook, Amazon, Netflix and Google in the FAANG group.

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Either way, the first publicly traded American company to reach a trillion-dollar market capitalization has seen its value tumble to around £839bn at the time of writing. Apple passed the trillion dollar mark on August 2 when its shares hit £207.05.

They went on to peak at £233.47. Today, they are below £177. A loss of more than 20 percent puts the stock in bear market territory.

The tumble does not reflect Apple’s latest financial results, which were excellent. However, there are a number of reasons for the fall. First, Apple announced that it would stop providing numbers for unit sales of its major products, which have been falling.

Apple argued that it was making more money by raising prices and by selling services, and that it should be judged on that basis. But it still worried investors. Second, several Apple suppliers reduced their sales forecasts, with the Wall Street Journal claiming that “Apple slashed production orders for all three iPhone models that it unveiled in September”.

This was reinforced by more recent reports about iPhone manufacturers, Foxconn and Pegatron. SEE: Special report: Tech budgets 2018: A CXO’s guide (free PDF)

Third, the market is concerned about Donald Trump’s trade war with China, and the prospect that it might affect Apple. Fourth, the whole stock market is down: it’s enjoying a “correction” after a near 10-year bull run.

Tech stocks led the charge, so tech stocks have been the first to suffer. It’s not clear that any of the fundamentals have changed, but there has been a change in momentum. (Tech stocks were going up so you could bet they would keep going up. Now tech stocks are going down so you can bet they will keep going down… until they start going up again.)

It may not make much sense, but tech stocks are now worth more than £1 trillion less than they used to be.

Image: ZDNet screen grab from Yahoo Finance

So far, the effects have not been terrible for long-term Apple shareholders. The £176.78 price tag (see graph) is still higher than the £175 at which they started the year, and comfortably ahead of the 52-week low of £150. Five years ago, they were half that.

Ten years ago, they were less than £5. And, as mentioned, other “hot” tech stocks in the FAANG group have suffered as well. Amazon shares peaked at £2,050.50.

Now they are down to £1,516, valuing the company at £742bn. At its peak, Amazon also broke the trillion barrier. Google (Alphabet) shares peaked at £1,273.89.

Now they are down to £1,038, valuing the company at £724bn. Facebook shares peaked at £218.62, and they have collapsed to £135, valuing the company at £387bn. Netflix shares peaked at £423.31, and they have fallen to £262, valuing the company at £114bn.

While not part of FAANG, Microsoft and IBM have also seen their share prices tumble. Microsoft shares have fallen from an all-time high of £116.18 to their current £103, valuing the company at £791bn. This is, surprisingly, more than either Amazon or Google, and not far short of Apple’s £839bn.

IBM shares have slumped from a 52-week high of £171.13 to £118.57, valuing the company at £108bn – which is less than Netflix.

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