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Like Facebook it was really only going to be a matter of time before the shine came off Apple shares. The question of just how influential one creator – Steve Jobs – can really be to the value of a company, even one as large as Apple, is going to be debated for years and this is not the time or the place.

Apple shares take a hit

But Apple has been running scared for some time in the post-Jobs era, and while many investors have treated it as the next best thing to US Treasuries, this has been far from the case. The signs of problems for Apple have been obvious for a while – in November Tim Cook said Apple would no longer disclose unit sales figures for iPhones. Why? Investors in Apple shares could only assume that they were not selling as well.

After hours trading in Apple shares saw the stock at around $146 with a total market valuation of just under $700 billion. It trading alert has cut the Apple earnings guidance for its fiscal first quarter by some 10%.

Apple shares have effectively lost 38% of their value since October. Given the number of fund managers and investors who have been riding Apple stock down since then, there will be a lot of long faces reporting for work on Monday.

“Bulls of the stock will point out that even this downgraded guidance still means earnings per share are forecast to grow some 7% year-on-year, but all that increase comes from a drop in the tax charge and a lower share count following the company’s massive share buyback scheme,” says Russ Mould, investment director at AJ Bell.

Cook has pinned the profit shortfall on China and worries that Donald Trump’s trade policies and desire to put America first. But the statement also blames the stronger dollar, weakness in other emerging markets and also slower than expected iPhone upgrade sales in developed markets, which may be a consequence of Cook’s decision to jack up prices for the latest iPhone models.

Have Apple shares run out of steam at last?

But it is more than this – Apple has been relying heavily on products that are now starting to age – the iPhone is technically an 11 year old model. It is competing in a market that loves the latest gadget, the new shiny. Jobs was able to deliver this and do it consistently; Cook has not. And Apple has been starting to look as a much more expensive product with little additional utility versus its competition. It is in danger of conceding the upper hand to Samsung or Microsoft.

We have felt this was a long time coming – the slide since October of a company that is coming down to earth as a lack of real innovation feeds through into slowing sales.

More reading for Armchair Traders:

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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