Unless you were hiding under a rock, you no doubt witnessed the crazy roller coaster ride that shareholders of Apple (AAPL) experienced this week.
To be honest, I’m sure some investors lost their lunch… even if they didn’t own Apple.
If you cut though all the news, there’s an important lesson to be learned here… but more on that in a minute. What I want to do is touch on what’s transpired in just the last few days. Then I’ll give you my thoughts on what it means for the future.
Just a week ago, there was a major news announcement in the technology world.
Verizon (VZ) one of the world’s largest cell phone carriers announced they would now be carrying the iPhone. As you know iPhone is the wildly popular, cell phone made by Apple.
This little bundle of technology is allowing people to connect in ways never before thought of. Apps, Apps, and more Apps seem to be the focus of the iPhone. You can download an App… or mini program… to do almost anything.
Some apps can translate signs for you. Others help calculate the tip at a restaurant. Apps can help with a science class, and there’s even an App that turns the phone into a level. Another App is a compass, and yet another is a map. If you can think it, there’s an App for it!
And that’s part of the reason iPhones are so incredibly popular.
So clearly the partnership between Verizon and Apple is a big deal. The announcement got a lot of press. But what got even more press was what was missing.
The central figure behind the market leading dominance of Apple is the company’s CEO Steve Jobs. Steve didn’t attend the Verizon iPhone launch… and immediately the rumors started.
Then over the long Martin Luther King holiday news broke.
Steve was taking a break from Apple to focus on his health. The guy had a liver transplant just a few years ago. He’s looked frail and weak ever since. But he needs to dial it back for now.
The rumors picked up speed.
His cancer was back… the liver transplant didn’t take… He’s dead, or dying. How sick he really is has become the key topic of debate. Personally, I wish him the best and hope his health returns right away.
Immediately the investing world started prying into Steve’s most intimate details. Some crazy people even called for his medical records to be made public. Look, I’m all for full disclosure, but this is getting ridiculous!
Regardless of the disclosure, the news of his reduced responsibility was traumatic for the stock.
Investors did what they do best during times of uncertainty… they sold their Apple. Just look at the chart.
Chart Courtesy of BigCharts.com
You can see the stock plummeting as clear as day. When it closed on January 14th, the stock was at $345.68 per share. On January 18th, only 30 minutes into trading, you could buy shares of AAPL for a mere $326. Almost $20 a share was shaved off the price of the stock.
Let me put that in perspective for you. Apple stock lost OVER $18 billion in value in less than 30 minutes… you could hand $75 to every man, woman and Child in America and still have some left over!
But the drop in stock price wasn’t the scary part… This is where the roller coaster ride does a double loop followed by a barrel roll.
After the loss of more than $18 billion in value, something strange happened. Apple put out a press release. With all the focus on the Steve Jobs’ medical announcement, many investors forgot Apple was releasing their quarterly financial results that day.
It was good news.
Apple blew away numbers and the stock rallied. All of a sudden, nobody cared about Steve Job’s health problems. And for a short time the stock had almost recovered to their previous highs.
The stock market reaction was exciting, gyrating, and nauseating all at the same time. Now you know what I mean when I say some people lost their lunch! Volatility like this made me want to throw up… and I don’t even own the stock.
So what’s the lesson to be learned in all of this?
It’s simple. Wall Street is a very intense place with a very short attention span. What might drive a stock lower… and cause some people to question the very existence of a company… could be replaced moments later by news that takes a stock through the stratosphere.
Now here’s my key takeaway.
Everyone’s still focused on the Apple news… but take a step back for a moment. Apple’s results weren’t a fluke. The company is doing really well… and that’s a sign as clear as day that technology stocks are starting to shine! When a market leader, like Apple, can shake off bad news and post incredible results, it’s a sign of leadership.
It’s a sign that we need to start watching technology stocks much more closely. I know I’m going to. And I recommend you do too!