Apple sheds $460 B in market cap in three months; loses most valuable company tag to Microsoft

The market cap erosion of Apple is more than Facebook’s overall valuation, and greater than the GDP of countries like South Africa, Iran, Austria and Norway.

In August last year, Apple became America’s first trillion-dollar corporation as its stock price surged to $207.39. In a memo to Apple employees, CEO Tim Cook dubbed it a “significant milestone” and went on to acknowledge maverick founder Steve Jobs for having built a unique, customer-centric company that builds products to “enrich lives”.

Apple’s valuation hit $1.16 trillion over the next two months, with the stock peaking at $232.07 on October 3. And then, the tide turned.

The iPhone-maker ceased to be a trillion-dollar company in November, after it issued a conservative outlook for holiday quarter sales. Apple’s stock was downgraded by two leading investment banks on Wall Street. Shares tumbled 9.2 percent following the downgrade, and continued to fall further as reports of Apple cutting down on new iPhone production emerged.

In the three months since October 2018, about $464 billion has been wiped off Apple’s valuation, and stock has fallen to a six-year-low. More than $75 billion was eroded off its market cap last week following Tim Cook’s letter to investors highlighting weak demand for iPhones in Greater China (which includes mainland China, Hong Kong and Taiwan).  

Not only this, Apple now trails Microsoft, Amazon and Alphabet in the list of world’s most-valuable companies. The iPhone-maker’s valuation now stands at $674.8 billion, according to Bloomberg. Further drops may not be entirely unexpected.

Macrotrends allows us to put Apple’s market cap erosion in perspective. It is more than Facebook’s overall valuation (~$384 billion), and is also greater than the GDP of entire countries like South Africa, Iran, Austria and Norway.

Closer home, iPhone sales declined for the first time in four years in 2018. In 2017, Apple had shipped over three million iPhones in India. It was expected to hit about two million units last year. However, the company has struggled to sell even a million iPhones in 2018, according to Counterpoint Research. iPhone’s market share in India has subsequently fallen from 2 percent to 1 percent, as Chinese brands dominate. 

“If you look at Q3 - it was 900K last year and this (year) is 450K,” Neil Shah, Research Director at Counterpoint, stated in a report. “iPhones have gone costlier and the features and specs aren’t that compelling. The install base of Android has grown vastly; the new customer base (for Apple) is not coming,” he added.