AAPL dips below $1T valuation as Wall Street continues coronavirus panic

Posted:
in AAPL Investors
Apple is no longer a company worth over a trillion dollars, a situation caused by investor panic over the coronavirus pandemic affecting stock markets around the world, but the reduced valuation is likely to be temporary.




Apple is famed for being a giant technology company and for having an extremely high value, with it being one of the few organizations traded on Nasdaq to have a valuation in excess of a trillion dollars. Due to COVID-19, that is currently not the case.

The sub-trillion valuation follows after two successive weekends where it seemed Apple was extremely close to doing so. On March 10, Apple's stock bounced back after weekend trading and a turbulent Monday devalued the price to $263.56, while March 16 saw Apple lose 12.5% of its value before rebounding.

The market capitalization, a value of a company's worth on a stock exchange, is calculated by multiplying the share price with its outstanding share count. While Apple has been buying back shares in the company, it won't change the market capitalization, as it improves the share price at the same time as reducing the number of outstanding shares.

Apple became the first US company to ever hit the $1 trillion market cap milestone in August 2018, but it is also no stranger to losing the valuation and having to regain it later on. After returning below a trillion dollars following its January 2019 revenue warning, it reached the milestone a second time in May 2019 and a third time in September 2019.

The downturn for Apple this time is largely due to the current downturn observed in markets around the world, with investors concerned about the effects of the coronavirus on business in general. Retail problems, loss of production, travel restrictions and mass quarantine efforts have worried investors enough to make them uncertain about their investments.

Given how the coronavirus is set to be an issue that will take months at best to clear up, it is probable that investor panic will recede and markets will slowly return to normal. As too should Apple's valuation.

After closing stores as a precaution in China, Apple has since reopened all of its retail spaces in the country, while its suppliers in the region are also getting closer to resuming production at normal levels. As the virus spreads to other countries around the world, Apple is also performing similar mitigations, including closing all Italian stores and pausing its Today at Apple sessions across the US and Canada.

Comments

  • Reply 1 of 12
    coolfactorcoolfactor Posts: 1,793member
    Meanwhile Amazon and Microsoft are up.

    chemengin1
  • Reply 2 of 12
    coolfactorcoolfactor Posts: 1,793member

    After closing stores as a precaution in China, Apple has since reopened all of its retail spaces in the country, while its suppliers in the region are also getting closer to resuming production at normal levels.

    I'm still very puzzled by this. Is China "back to normal"? Are people out socializing and conducting business as they did before?


  • Reply 3 of 12
    crowleycrowley Posts: 7,615member
    Meanwhile Amazon and Microsoft are up.

    Why wouldn't they be?  Amazon deliver things, which people need a lot right now, and Microsoft provide digital services which people need a lot right now.  Apple are far more exposed because of their supply chain in a hard hit area and their premium market which will be hit more by the almost inevitable recession/depression.
    dewmeboxcatcherjdb8167entropys
  • Reply 4 of 12
    crowleycrowley Posts: 7,615member

    After closing stores as a precaution in China, Apple has since reopened all of its retail spaces in the country, while its suppliers in the region are also getting closer to resuming production at normal levels.

    I'm still very puzzled by this. Is China "back to normal"? Are people out socializing and conducting business as they did before?


    China is a big place, it probably varies from area to area.

    A report from the epicentrre: 
  • Reply 5 of 12
    gatorguygatorguy Posts: 22,824member
    crowley said:
    Meanwhile Amazon and Microsoft are up.

    Why wouldn't they be?  Amazon deliver things, which people need a lot right now, and Microsoft provide digital services which people need a lot right now.  Apple are far more exposed because of their supply chain in a hard hit area and their premium market which will be hit more by the almost inevitable recession/depression.
    FWIW, which is not much, Microsoft is the last remaining US member of the $1T club.
    chemengin1
  • Reply 6 of 12
    SoliSoli Posts: 10,029member
    gatorguy said:
    crowley said:
    Meanwhile Amazon and Microsoft are up.

    Why wouldn't they be?  Amazon deliver things, which people need a lot right now, and Microsoft provide digital services which people need a lot right now.  Apple are far more exposed because of their supply chain in a hard hit area and their premium market which will be hit more by the almost inevitable recession/depression.
    FWIW, which is not much, Microsoft is the last remaining US member of the $1T club.
    And that's only because people are more confident about MS because of their long history of dealing with countless viruses.  :smile: 
    ihatescreennamesdjames4242kuduDAalsethStrangeDaysBeatsjdb8167lkruppRonnnieOwatto_cobra
  • Reply 7 of 12
    blastdoorblastdoor Posts: 2,353member
    I went to 100% cash in January (no, I'm not a US senator -- I just thought the market was overvalued, regardless of The Virus). I recently bought some VZ and T, figuring demand for their products will be going up. 

    I'm looking forward to getting back into AAPL, but I don't think it's at the bottom yet, so I'll continue to bide my time.
    watto_cobra
  • Reply 8 of 12
    SpamSandwichSpamSandwich Posts: 33,408member
    blastdoor said:
    I went to 100% cash in January (no, I'm not a US senator -- I just thought the market was overvalued, regardless of The Virus). I recently bought some VZ and T, figuring demand for their products will be going up. 

    I'm looking forward to getting back into AAPL, but I don't think it's at the bottom yet, so I'll continue to bide my time.
    It’s not far off from $200 today, which is my current buy level. 

    (This is not buy or sell advice. Never take investing advice from people on the Internet.)
    watto_cobra
  • Reply 9 of 12

    Panic like this??
    watto_cobra
  • Reply 10 of 12
    blastdoorblastdoor Posts: 2,353member
    blastdoor said:
    I went to 100% cash in January (no, I'm not a US senator -- I just thought the market was overvalued, regardless of The Virus). I recently bought some VZ and T, figuring demand for their products will be going up. 

    I'm looking forward to getting back into AAPL, but I don't think it's at the bottom yet, so I'll continue to bide my time.
    It’s not far off from $200 today, which is my current buy level. 

    (This is not buy or sell advice. Never take investing advice from people on the Internet.)
    That is a tempting price. My hunch is that it will go lower than that, though. I'm thinking it could bottom out around $150. 
  • Reply 11 of 12
    SpamSandwichSpamSandwich Posts: 33,408member
    blastdoor said:
    blastdoor said:
    I went to 100% cash in January (no, I'm not a US senator -- I just thought the market was overvalued, regardless of The Virus). I recently bought some VZ and T, figuring demand for their products will be going up. 

    I'm looking forward to getting back into AAPL, but I don't think it's at the bottom yet, so I'll continue to bide my time.
    It’s not far off from $200 today, which is my current buy level. 

    (This is not buy or sell advice. Never take investing advice from people on the Internet.)
    That is a tempting price. My hunch is that it will go lower than that, though. I'm thinking it could bottom out around $150. 
    I have a second buy order near that price, just in case the market completely craters.
  • Reply 12 of 12
    MarvinMarvin Posts: 14,430moderator
    lkrupp said:
    Can't believe how some here casually think it's okay to take other people's wealth away from them because "they don't need it". The Constitution says we have the right to life, liberty, and the pursuit of happiness. It doesn't say we the right to wealth equality by taking from others what they built. Left wing politicians have decided that the magic number for income is $250,000.00 and anything over that makes you a member of the idle rich to be soaked. The current proposed emergency bailout says if you make more than $75,000.00 a year you don't qualify for a check. If you and your spouse file jointly and make over $150,000.00 you don't qualify either. Who decided that?
    Wealth equality is the wrong term to use, it wouldn't make sense for everyone to be equally wealthy. There needs to be fairness in how we value people's contributions. We all have the same amount of hours in the day, we all have roughly similar physical limitations and so we all have a common range of effort that we can contribute to maintaining our mutual quality of life.

    When we invent an economic system that says one person's contribution is worth the same as 1 million other people, that's not a fair system.

    It also leads to a scenario where people have less opportunity to life, liberty and the pursuit of happiness. When someone owns so much, they invest it. Often they invest in property, which they rent out to workers. Workers who already have a low quality of life are renting from rich people and making them richer. Poorer classes are paying interest on loans where rich people just buy things. It costs a rich person less to buy something outright than it does for a poor person to pay up a loan with interest.

    Many working class people today have no hope of ever owning a home because their income is far enough below living costs that there's no way they could save up enough to pay off a loan over 40 years.

    Fairness doesn't mean taking all the wealth from wealthy people. That's not even possible because it's tied up in company shareholdings. A lot of the net worth valuations of billionaires are based on how much their company is worth, like the $1t valuation mentioned in the article. That's not cash sitting around, that would have to be liquidated by selling to other people. To have a fair economic system, we certainly need to have a higher minimum threshold of income and possibly a lower maximum.

    The simplest way to do this to avoid people thinking that people are stealing their hard earned money is to print more money and give it to the lowest earning workers, which devalues the wealth held by the people at the top without touching it. If this leads to a rise in prices then of course there has to be stricter taxation to prevent it all just accelerating the income of the top earners. But this kind of economic system is going to become essential in times like we are seeing now where low income workers put in work for decades with nothing to show for it and one day a super-virus hits and the wealthy owners just say 'your work is no longer required' and they end up destitute overnight.

    People need to have hope and confidence that what they are working for means something or our whole economic system is a fraud and this will become clearer to people over time and revolt against it. Look at how quickly the entire world has fallen apart over a matter of weeks. Businesses collapsing, people don't know where to look for work or food.

    https://www.forbes.com/sites/lisettevoytko/2020/03/23/coronavirus-layoffs-ge-latest-to-shed-jobs-during-pandemic/

    We can't have a system where food is still being produced by some people and some other people work for an airline, then people stop flying due to the health risks and we then say to the airline workers that got fired that they don't get any money to buy the food that is still being produced. This virus is a wake-up call to the entire world that we need a different economy because the one we have is unsustainable. The economy we need should be based on the fundamental truth that we're all breathing the same air, putting in a day's work on the same earth in the same short time we get to live our life and it needs to value people like that, fairly.

    It's not a matter of opinion how we define what's fair, we have objective measures of quality of life and a well-defined economic system. An objectively fair system is one that meets our standards for a given minimum quality of life. We invented the system we have now, we just made it up, every job role, every currency, every language, every country and when it stops working, we need to make a new one.

    PS I didn't close the discussion.
    edited March 2020 Soligatorguywatto_cobramuthuk_vanalingam
This discussion has been closed.