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29 March 2024

Apple Inc. shares plunge ahead of iPhone 6 launch; blame Samsung for it

Published
By Vicky Kapur

As rival Samsung Electronics unveiled a suite of new products in a media launch on Wednesday, ahead of the IFA electronics show in Berlin, shares in Cupertino-based Apple Inc. (NASDAQ:AAPL) took a nosedive.

The iPhone maker’s shares fell more than 4 per cent during yesterday’s session — their worst showing since late-January — after Samsung unveiled the Galaxy Note Edge phone, the new Galaxy Note 4 phablet and a virtual-reality headset for the phone called Gear VR to watch concerts or play games.

Samsung’s new devices, including the Note Edge that comes with a side display for quicker access to Twitter, the flashlight, news and other apps, have been showcased less than a week before Apple is said to unveil the iPhone 6, the latest iteration its flagship smartphone.

That the shares dropped ahead of the new Apple unveiling and along with the unveiling of its arch-rivals devices should worry finance heads at the Cupertino-based firm as it may signal a lack of investor confidence.

To be fair, the stock drop came a day after Apple shares hit an all-time high of $103.74, and the drop may be nothing more than profit-taking.

But there’s a lot happening with Apple (and its rivals) that may be making investors jittery. Apple’s online storage service has been in the eye of the storm after a group of determined hackers recently broke into the iCloud accounts of Jennifer Lawrence, Kate Upton and a number of other celebrities.

Apple on Tuesday said that the theft of private photos from celebrities was not because of a security breach of its iCloud system, but that hackers managed to take usernames and passwords for the accounts.

AAPL shares closed at $98.94 Wednesday, with many more than usual shares changing hands. A total of 94 million shares changed hands yesterday, more than double of AAPL’s 50-day daily moving average of 45.8 million shares.

While Samsung executives were busy unveiling their new devices, a number of Apple investors were busy profit-taking. It was indeed one of its busiest days of the year for the stock, wiping off more than $26 billion of Apple’s market value. Remember, though, that Apple shares are up almost a quarter so far this year, despite yesterday’s plunge.

Apple will be hoping that the reason behind yesterday’s fall is profit-taking and investor – or worse, customer – apathy. The company hasn’t launched a new product category since 2010 even though that could change next week if it unveils the rumoured iWatch along with the iPhone 6.

In addition, as we have noted in the past, Apple shares move up on rumours of good news and seem to come down when the good news is actually announced. Buy the rumour, sell the news is a popular maxim with Apple investors, it would seem.

Besides, competition in the smartphones domain is heating up, with it no longer being a two-horse race. Another of Apple’s smartphone rivals, Sony unveiled three new Xperia handsets yesterday, and two of them allow users to play games off their PlayStation 4 remotely using their Z3.

Nevertheless, whether it likes it or not, it’s perhaps time for Apple to acknowledge that competition has begun playing a role in its financial life. It’s long been argued that Samsung and others follow where Apple treads. Now, however, Apple is expected to play catch up to against the new gadgets that its rivals have just released.

Will the iPhone 6 be larger in size – closer to the Note 4 or the Galaxy S5? Will it have NFC-enabled like its rivals? Will it come with a stylus? Will it be able to power up a wireless virtual reality headset? Will it allow users to use it as a remote for a gaming console?

We – and Apple investors – will soon fund out.