Apple Stock Hurt With Market Woes

By Richard Menta 6/28/08

It makes sense that with the gas running four bucks for a gallon we as consumers are focusing more of our remaining dollars on the necessities of life and foregoing many of the frivolities. So while I know many who will claim that their mobile phone qualifies as a necessity, they may be in no hurry to upgrade a working phone.

So it stands to reason that as both consumer confidence and the stock market plummet, shoppers will think twice about upgrading to an iPhone or adding that second or third iPod. This is what the pundits on Wall Street were probably thinking a few days ago when Apple's stock was holding steady in the mid-$180 a share range. With oil prices jumping up again and the Dow Jones taking a sharp hit, Apple saw it stock plummet in days to around $164. This included a 9 point drop on Wednesday. The stock bounced back a bit on Friday to just over $170.

The big question then is what will Apple do to assuage investor fears come Fall, a time when the chicken littles on broad street get particularly nervous? This is the time when the iPod line usually gets upgraded and some new products are introduced. While Apple's innovations call for investors to stick with the company for the long haul, a less than splashy press intro come this September/October could beat up the stock further.

This doesn't mean that Apple isn't coming through with strong product and business innovation. It just is the reality that when you are perceived by many as the coolest company in the world, fans tend to over-speculate. The end result is that expectations become too high and disappointment is inevitable. That sets the stage for an over-reaction by the stock market, similar to the mercurial ride Apple's stock has already taken from $200 to begin the year to $125 around Easter.

From this only the quarterly sales figures released by Apple seem to balance the FUD encirling the street this year - for a few days anyway. Until the next financial call thing may get wilder.

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