Apple Shares Fall 10% In After-Hours Trading, Biggest Drop In 1578 Days

Apple just announced its Q1 2013 earnings, and investors don’t seem to be convinced. The company missed on revenue and exceeded expectations on earnings per share. After a solid day of trading for Apple shares (NASDAQ:AAPL), the stock dropped more than 10 percent in after-hours trading, inducing a big market capitalization meltdown.

It is the biggest drop of the past four years for Apple shares. At that time, Reuters reported that Morgan Stanley had cut its price target to $115 from $178. Apple shares have taken off since 2008.

As I previously wrote, Apple suffers from a lot of uncertainty and volatility these days. But again, investors just shaved off $50 billion market cap. As Apple is the biggest traded company in the world, a double-digit drop is massive.

It doesn’t mean that Apple shares will drop even more tomorrow. It is a short-term reaction to somewhat disappointing quarterly earnings. Apple still generated $13.1 billion in profit — nothing to be ashamed of.

Even more important, today’s earnings were highly anticipated as analysts and investors didn’t know what to expect. Apple reported results that were very close to analysts’ expectations. Today may mark the end of such a high volatility level for Apple shares.

Yet, today’s meltdown is a milestone for Apple shares, which have been steadily growing over the years under Steve Jobs and Tim Cook. With $196 billion in assets, those assets represent a good portion of Apple’s market capitalization of $484 billion. It makes it look like Apple is currently underpriced. It remains to be seen whether analysts believe that Apple is fairly priced or not.

When it comes to revenue and profit, it was Apple’s best quarter. But shareholders expected more.