Apple Sinks the Market

You know you've become a massive company when market-recap articles begin with the words "U.S. Stocks Drop on Apple Slump." That headline isn't necessarily unfair, either, Apple (NAS: AAPL) dropped about 2.2% today. With its weighting of 12.7% of the Nasdaq (INDEX: ^IXIC) , that means the company alone was responsible for .28% of the entire Nasdaq's .76% drop.

That's an astounding amount of influence from one company. Here's a chart that shows not only Apple's movement today, but also how it stacks up against other movers and shakers in the tech space.

What's drving Apple's losses, now 9.5% off the highs the company was trading at on the day of the iPhone 5 launch?

Reading the market's mind is an exercise in futility. However, negativity around Apple's products in the media and analyst chatter seem to be holding the company back.

On the media side, if you remember back to the day of the iPhone 5 launch, reviews were overwhelmingly positive. Heavy-hitter reviewers in the tech space such as Walt Mossberg of The Wall Street Journal and David Pogue of The New York Times were glowing in the praise. Just look at the final conclusion from Mossberg's review:

"Apple has taken an already great product and made it better, overall. Consumers who prefer huge screens or certain marginal features have plenty of other choices, but the iPhone 5 is an excellent choice."

However, in spite of these overall glowing reviews, mentions that Maps is a less-than-stellar inclusion to the iPhone 5 seemed to gain more attention in subsequent days, eventually leading to an apology from Tim Cook.

Perhaps more important to investors was news that Apple sold "only" 5 million iPhone units in its launch weekend. That compared with 4 million iPhones launched during the iPhone 4S launch, but it fell short of higher expectations of up to 10 million launch weekend sales.

That opening weekend, iPhone 5 sales were ultimately constrained by the amount of iPhones available for sale -- apparently because of yield issues with Apple's new in-screen display. But that didn't temper dissapointment over sales levels. In fact, smaller-than-expected opening weekend sales levels led to doubts about Apple's ability to hit lofty sales expectations in the holiday quarter. Many analysts believe Apple could sell well beyond 45 million iPhones next quarter.

So ... what? Time to sell?
Of course, the real question that needs to be answered is this: Are investors selling off Apple today making a mistake?

In my opinion, the answer is yes. As far as Maps, past "flubs" like Antennagate or Siri didn't lead to sales hiccups. While Maps has garnered quite a bit of attention in the media, it's probably not deterring many potential iPhone customers.

On the area of "dissapointment" over launch-weekend iPhone sales, it's simply not a key point of concern. The fact is, wait times for the iPhone are still three to four weeks and initial weekend sales weren't close to continuing demand. Plus, investors need to acclimate themselves to the fact that Apple's a global company. While the U.S. is still Apple's largest market, demand is increasingly shifting away to markets that weren't included in the opening weekend launch of the iPhone. Opening-weekend sales in nine countries aren't a proxy for global demand across a holiday quarter.

Long-term investing
While Apple bears might be all too happy to note the comapny's decline since the iPhone 5 hit, the bottom line is that "dissapointing" news surrounding Apple in the past two weeks looks largely short-term in nature. In the longer term, Apple still looks set to have a holiday quarter that smashes all kinds of corporate records.

Yesterday I was at a mall and noticed a long line around the Apple store. Two weeks after its launch, people were still lining up for the iPhone 5. To my amusement, next to the line was a single Sony (NYS: SNE) employee standing in an adjacent Sony Store. He was the only customer inside. In his hand was an iPhone.

Personal anecdotes aren't normally of much value. However, it's a reminder that beyond the skittish worries, Apple is still in the middle of a historic disruption of consumers' expectations for devices. Supply shortages and media brou-ha-ha over Maps aside, the bigger picture to investing in Apple is a decade-long reshaping of the entire technology industry.

Apple has become the defining technology company of the decade. Chances are, if you've invested in the company, it has put up massive returns. However, with not only individual investors but also hedge funds racing to buy Apple hand over fist, the question is how much money is left to be made in the company's stock. As The Motley Fool's senior technology analyst, I've created a report that not only details Apple's future growth drivers that are shrouded in secrecy, like Apple TV, but also lays out reasons to buy and sell the company, along with other opportunities. To get exclusive access to this report as well as continuing guidance on the company, click here to get started now.

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Eric Bleeker has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple and is short Sony and has options on Sony. Motley Fool newsletter services recommend Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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