The impact of Apple company stocks on the economy - Essay Example

Paradoxically, the institutional investors of Apple had a stock value of $427 billion whereas those of Microsoft had the stock value of only $172 billion. Apple saw the peak value of its shares worth $702.10 on 19 September 2012, but its fall as of 16 November 2012 has been quite as remarkable, when the value of its shares dropped to $505.75. A senior research analyst, Brian Colello said, “It's just amazing because it's such a large company. The company lost about $35 billion in market cap in one day.

That's the size of some large-cap stocks” (Colello cited in O’Brien, 2012). The senior index analyst, Howard Silverblatt, said, “The impact on shareholders and on the economy is incredible. We've not seen anything like this in the modern trading era. Ever” (Silverblatt cited in O’Brien, 2012). People tend to understand the behavior of Apple’s stock by considering the bits of bad news, the questions and controversies about Apple’s competition and its market share, that in reality, have little to do with the Apple shares.

According to Steven Milunovich, a UBS analyst, the rate of manufacture of Apple iPhones would decline in the first quarter of the year 2013 (NBC News, 2012). Milunovich expects Apple to produce 2 million fewer iPads and 5 million fewer iPhones till September 2013, though he expects Apple to be able to sell up to 41 million iPhones in the first quarter of the year 2013, followed by 36 million in the second quarter and 33 million in the third quarter of 2013. In addition to that, Milunovich also expects sale of about 21.

7 million iPads, 24.5 million iPads, and 20.7 million iPads in the first, second, and third quarter of the year 2013 respectively. Nevertheless, “The extraordinary volatility is the result of Apple's strength. People try to blame the volatility on Apple's weaknesses” (Schwarz cited in O’Brien, 2012). Since the establishment of Apple Inc. as a company, there have been mixed effects on the economy. Apple has conventionally had tremendous effect on the economy. This is evident from the fact that the sales of iPhone added anywhere from 0.25 to 0.5 percentage point to the growth rate of the US economy (Rushe, 2012).

While on one hand, consumers have contributed a lot to the economy by buying the supplies and the different electronic gadgets that Apple has made available to them, on the other hand, companies competing with Apple have faced a decrease in the values of their shares and so have their shareholders and investors since Apple has outdone them in the sale of products. Since Apple has contributed immensely to the economy in the recent years, the economy has started to increasingly depend and rely on Apple.

Accordingly, with the downfall of the value of Apple’s shares, the economy goes down as well. However, the downfall of the value of Apple’s stock is not expected to sustain for too long and is expected to rise again as soon as Apple introduces another innovative product into the market. “Whether it is an iTV, wearable computers, or another new product category, we have faith that innovation is not dead” (Milonovich cited in NBC News, 2012). Concluding, despite the apparent decline in the value of its shares in the recent weeks, Apple still remains the most valuable company among all in the world.

However, the investors are becoming increasingly cautious regarding the future of the company and its ability to introduce