14 DAY TRIAL // Apple's stock is an amazing success story, but for those who have kept a close eye on it over the years it is also an example of extreme volatility. Apple's stock rides the ebb and flow of rumors, reports and speculations and while for the large part it goes up, there are also moments when it does down, like a rock. Such is the case of the latest iPhone production cut report that is the perfect example of an unfounded rumor causing the stock to take an amazing nose dive.
The reports of an Apple production problem that would end up cutting iPhone manufacturing in half, from 9 million units this quarter to 4.5 million, started making the rounds yesterday. As a result of these rumors that were picked up and propagated as reports, Apple's stock tanked hard. First three percent, then five, then seven, all because of this rumor. It was widely reported that the information came from a note from the stock-trading desk at Miller Tabak & Co. It turns out that the note that reportedly came from trader Peter Boockvar does not actually exist. It would seem that this entire report is based on the conversation between one trader and a client who asked whether he had heard of the rumor. When Boockvar said yes, meaning that he had indeed heard of the rumor, this became confirmed news attributed to his firm. The research note did not come from Boockvar? "We weren't issuing any kind of report," Boockvar told Jim Goldman for CNBC. "We don't have an Apple analyst. We don't even have a tech analyst!"
Despite the information that this note did not actually exist, the damage was already done and Apple saw a $8 billion in market cap gone because of sensationalist reporting. This is not the first such occurrence, with Apple's stock taking a similar fall after Engadget published what was supposed to be a leaked mail from Apple that detailed the delay of the iPhone and Leopard. We also see the same phenomenon with regularity whenever there is a Mac security alert that gets blown way out of proportion, spawns doomsday reports and predictions and then turns out to be a little more than a gutted proof of concept vulnerability that you have to go out of your way to expose yourself to.
While Apple is clearly a hot company with hot products that are always in the headlines and always guarantee hits and ad revenue, rumor reports that impact the stock to such a level are a serious matter. Many investors lost their Apple stock because of automatic sell points that were triggered by the fall and this created a wonderful buying opportunity for other third parties. Buying Apple stock at $130 instead of $150 is a big deal, especially considering that Apple's stock is expected to bounce back and even further the way it always does. Stock manipulation is supposed to be illegal, but in today's world of online journalism and blogs it has become something very easy to do, especially with such a high profile company like Apple.