According to Forbes, Apple is the most valuable brand followed by Google and Microsoft. This helps to understand how a downgrade of Apple’s stock by Mizuho Securities’ Abhey Lamba caused a massive shift in the Nasdaq and how Apple, Alphabet (Google), Microsoft, Facebook and Amazon lost $100 billion in market value on Friday.
This is of course a massive amount of money and the word loss next to it makes it seem very even more important. May I remind you that by Tuesday evening a good portion of these losses were already ‘created’ again by the an increase in the stock values.
All of these stock fluctuations seem of only minor interest to a technology analyst like your’s truly, however we have to recognize that money does make the world go around and significant shifts in stock values can influence technology decisions in the long run. In the short term it creates some very uncomfortable time for investors in these particular stocks. In order to show you how uncomfortable this time will be I have attached the development of the Nasdaq and Apple shares over the last year.
Apple Stock and Nasdaq Development over the last Year- from Yahoo Finance. Nasdaq is blue.
Horrible times isn’t it. Overall everyone invested in the Nasdaq and Apple especially should have no reason to break a sweat. There is no question that the downgrade to the Apple stock caused a slight downturn for the Nasdaq as well as other tech shares shedding some value as well. However if we we look at the chart in more detail one may notice that the Apple downturn started ever so slightly before the downgrade was announced and the day after the downgrade massive buying set in at substantially lower prices. That’s something that every successful and publicly traded company has to deal with.
The question is, what does the rest of the tech gang have to do with this? The short answer is nothing. There was no mention of any other tech company on the downgrade notice or even a reason related to technology included. The whole downgrade was based on the fact that Apple had reached the expected target value for 2017 as was set by this company. Nobody has ever said that this was the right value, they just felt that is where Apple should be by the end the year and Apple got there a little early.
So far so good.
In the following days I have seen several articles trying to combine anything that Apple said to this downgrade (the analysts must have had a reason for this downgrade – right?). So, the Apple iPhone is not fast enough to deal with the fastest wireless networks, the new iPhone maybe delayed, the Apple Car may not be a car after all, etc. I kind of feel bad for the Apple executives that have to go in front of analysts after such a downgrade, everything they say will be used as a potential reason against them in the court of internet news. Even if they come out saying something very positive, maybe it is about something they didn’t say. It is a crazy world after all.
Nevertheless, it shows how a large company like Apple drives the industry as a whole beyond all logical explanations. We have to remember that technology and investment / finance are two very different professions and what makes a good technology may not turn out as such a good investment after all. Good investments are often the basis for good technology but even this connection is very weak at best.
Apple is still the number one brand, and to my best guess, someone made a killing in the stock market after the downturn. For full disclosure, I do not own shares of any of these companies (I do own mutual funds that may own some though) and there is a reason for this. Many years ago I found out that what I thought was a great technology never influenced any share prices enough to allow early retirement. – NH
