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What's happening to Apple's share price?

Karen Haslam | April 22, 2013
Last night Apple's share price declined to $392.05, wiping 44.16% or $310.05 of the value of each AAPL share since September 2012 (the stock closed at $702.10 on 19 September), and dropping to its lowest level since December 2011. In the first quarter of the year Apple was one of the worst performers of the S&P 500 in what is being described as a crisis among investors.

Apple's last major announcement was the iPad mini in October, although the company did release the 128GB iPad in January and updated the MacBook Pro with Retina Display in February.

There had been rumours that Apple would release an updated iPad in March or April, but this has failed to materialise, leading to suggestions that something is up with Apple's product cycle. However, while last March apple did launch the third generation iPad, it wasn't until June that other products were launched.

October: iPad mini, 4th generation iPad, Retina 13 MacBook Pro, iMacSeptember: iPhone 5, iPod touch, iPod nano, iTunes, iOS 6July: Mountain LionJune: MacBook Pro with Retina, MacBook AirMarch: The New iPad, iTV

7) Trader misbehaviour

There's one other factor that may be at play. As we have noted a number of times over the past few months, small traders need to be aware of the big funds who have the ability to invest or remove large sums of money from AAPL causing massive changes to the value of the stock.

It emerged that one of the causes of the AAPL stock decline in the fourth quarter of 2012 was the decision of four of the biggest hedge funds to dump billions of dollars of Apple stock.

Omega Advisors, Eton Park Capital Management, Jana Partners and Farallon Capital unloaded 796,000 Apple shares between September 30 and December 31, according to SEC filings.

Another recent example of big players causing big changes to Apple's stock include "a very premeditated unloading of some 800K shares (some $350 million worth) of AAPL in the last second [of trading]" on 25 January.

Just this week a trader pleaded guilty for his part in a $1.6 billion AAPL scheme designed so he would profit if the stock price rose.

How can Apple recover?

1) Launch a new iPhone

Reports from the Asian supply chain suggest that Apple is gearing up for a June launch of a new iPhone, however, there are also concerns that Apple's flagship device may not be updated until September.

When the new phone launches it needs to compete with the Galaxy S4 and the Android operating system. There are also calls for Apple to offer a low cost phone in a bid to target the new emerging markets of China and India, however, as mentioned above, a low-cost iPhone may negatively effect margins, which is not something that investors want to see.

2) Come up with another revolutionary product

To see continued success, Apple needs a new high-profile, disruptive product. The iPhone's heyday may be over. The company needs to innovate products with new market potential. There have been suggestions that for Apple is gearing up to launch a TV and a smart watch (iWatch), either of which may give investors new passion for the stock.

 

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