Apple Inc stock suffered the largest price drop in three months after trading started on Monday. The most valuable brand in the world saw 6 percent taken off the company’s $700 billion market cap on an unusual volume spike, before it recovered enough to cut the loss by half.
The sudden dip is still being talked about in the Wall Street, but according to Reuters, the sudden increase could have tumbled the stock to a greater extent than the current drop to $111.27. At 9:51 a.m. EST, more than 6.7 million shares were traded in a single minute stretch, which marked the heaviest one minute of Apple trading since October 29th. At the low time of the day, the Cupertino Company lost more than $40 billion in market value.
The drop comes amid talk that AAPL might be the first to reach $1 trillion in valuation. Apple advocates think that competition laws aren’t applicable and the stock will only rise, allowing the company to price iPhones at $650 or more despite competition from rivals and significant comparisons between old and new iPhone models.
The cause of the plunge is not apparent yet, though traders took no time in pointing towards institutions that were using selling programs across a wide strip of stocks. This kind of price reaction could mean that algorithms were running the stocks.
Another potential catalyst for the price drop could be the recent controversies in the global oil market. Because of liquidity, traders may have wanted to free energy and oil shares as their decline could have affected other markets. Head of trading at First New York Securities Sam Ginzburg stated that funds that faced losses on their investments in oil have to find a way out of the liquid securities in other industries.
Strategists at Morgan Stanley reduced Apple’s hold in their strategic portfolio from 4 percent to 3 percent in a note released on Monday, but traders stated that the swiftness of the decrease was dramatic and could not be attributed to the note alone, because the note was released before trading began.
Some analysts think that this kind of volatility is bound to happen, and most of the news since the start of AAPL shows that betting against Apple stock is a mistake. However, the recent decline is a sign that winners too can take a dip, and when they do, it can lead to dramatic losses.