Apple stock implosion shreds $113.4B

Matt Krantz
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Apple (AAPL) shares fell significantly for the second day Tuesday — bringing investors' paper losses to staggering levels and putting the stock further into correction territory.

Shares of Apple finished down $3.80, or 3.2%, to $114.64 in regular trading Tuesday, meaning they've fallen more than 14% since hitting their high of $134.54 on April 28. Given the massive size of Apple's market value, this sell off is enormous in that it has wiped out $113 billion in paper wealth. The sell off essentially erases more than the entire market value of corporate giants including Nike (NKE) at $98 billion or McDonald's (MCD) at $95 billion, separately.

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It's the stock's third five-day losing streak in the past month, knocking the stock down 7% in just that time, says Bespoke Investment Group. The stock is down further from its average price the past 50 days than it has been in 12 years, Bespoke says.

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Investors are fretting over evidence that competition is heating up for smartphones in China, which is seen as the last big market of growth for the company. Meanwhile, here in the U.S. smartphones are already saturated and are priced as a replacement market, much like personal computers.

Apple continues to try to keep average selling prices high — north of $600 per phone — as competition is only intensifying and more computing is done by the cloud, which is agnostic to the device. Investors worry the company could have difficulty putting up the massive revenue gains of the past year if smartphones prices fall or demand in China softens.

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There have also been reports of new malware that target Macs, eating away at the company's long-standing claims it's largely immune from such security threats.

Apple continues to be the most valuable company in the Standard & Poor's 500 with a market capitalization of $657.6 billion, but its leadership in the stock market is fading away. Shares of the gadget maker are up just 3.9% this year. Shares of Google (GOOG) and Facebook (FB) are up 26% and 21% this year respectively.

Why is Apple selling off?

Analysts remain ever bullish on the stock. The average rating on the stock is an "outperform" and the average 18-month price target is $148.98.

And while the stock has collapsed below its average price the past 200 days, that's not necessarily a bad thing, Bespoke says. Apple shares have cratered below the 200-day moving average 17 times before. Over history, the stock has typically shaken off the stupor in about a month, Bespoke says.

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But even Bespoke is cautious. "By itself, that (stock's history of bouncing back after falling below the 200-day moving average) is probably not the best reason to go out and buy the stock," according to a Bespoke report.