After announcing record profits but still disappointing many analysts with this week's lackluster holiday-quarter earnings report, Apple stock Thursday was dumped by so many people so quickly that the scramble tripped a Nasdaq circuit breaker.
By the closing bell, Apple had lost 12.4 percent to close at $450.50, down more than $63 from the previous close. That put the stock back to its level from last January -- effectively erasing the entire year's gains that saw the shares run up to $700 by late September only to come crashing down in the final weeks of the year. Apple has now lost more than $225 billion in value since its peak, including a $5 billion loss Thursday alone.
Many analysts couldn't lower their estimation of Apple fast enough, as 18 brokerages, including Barclays Capital and Credit Suisse, cut their price targets on the stock by an average of $132.
There were plenty of reasons being bandied about for the stock's fall. Some analysts worried that recent rumors of Apple cutting orders to suppliers indicated a troublesome slump in demand for the popular but pricey iPhone, Apple's center-stage revenue driver. Others were concerned by CEO Tim Cook's remarks during Wednesday's conference call, when he indicated Apple would not reconsider the iPhone's smaller 3.5- and 4-inch screen size at a time when many fast-selling smartphones offer larger screens.
Jefferies analyst Peter Misek replied: "We think Apple is losing the screen-size wars."
Misek, a top-rated analyst known for accurately predicting Apple earnings, noted that many buyers were moving away from the iPhone-size screens in favor of the five-inch display offered by rivals such as Samsung Electronics and Nokia.
Some observers, however, felt investors were giving up on Apple way too fast.
After all, the world's most valuable public company did report record earnings, while managing to dodge a bullet with its profit number, slightly beating earnings from a year earlier. And it shipped a record 47.8 million iPhones in the December quarter, though this number lagged the average analyst forecast of 50 million units.
Ben Bajarin, an analyst with Creative Strategies, blamed part of the sell-off on the confusion many analysts felt about Apple's decision to change the way it predicts future earnings. In the past, Apple would provide a single and usually conservative earnings number, then turn around and blow that out of the water at the subsequent earnings announcement. But on Wednesday's call, after Chief Financial Officer Peter Oppenheimer announced Apple would now provide an estimate ranging between two numbers, analysts seemed confounded. And follow-up questions to Oppenheimer basically went unanswered.
"Apple's new policy on guidance has got people freaked out because nobody's sure what it all means," Bajarin said. "I think it'll take a couple of quarters for the street to know what to make of it. But this clearly has them spooked."
Expectations heading into the results had been subdued by news of possible production cutbacks, depressing a stock that hit an all-time intraday high of $705.07 just four months ago after the launch of the iPhone 5. Since then, Apple's shares have dropped 35 percent.
"To reaccelerate growth, Apple likely needs to launch new products, yet few seem likely before June," Nomura's Stuart Jeffrey said.
But Bajarin said the market seems to have completely overblown things.
"It's personally shocking to me that Apple is now trading at such a low price-to-earnings ratio," he said. "It's what you'd expect from a company hanging on for its life, but we all know Apple will be there for the long haul."
Reuters contributed to this report. Contact Patrick May at 408-920-5689; follow him at Twitter.com/patmaymerc.