Apple's stock fell below $600 in intraday trading on Friday for the first time since July, following a disappointing earnings report on Thursday and lower-than-expected projections for the company's profit margins for the December quarter.
The company surpassed analyst estimates for iPhone sales, but missed on iPad sales and its earnings-per-share for the September quarter. More alarming for investors, Apple projected that it will report a significantly lower profit margin in the upcoming fiscal quarter than analysts had expected. Apple said that it will report a profit of $11.75 a share in the December quarter, compared to analyst estimates of $15.49 a share.
Tim Cook, Apple's CEO, suggested that the lower profit margin is due to Apple being particularly prolific in rolling out new products, which have higher costs. At the same time, some of these new products like the iPad Mini are being sold closer to cost, meaning it has a lower profit margin.
Several analysts responded to the earnings announcement and lower-than-expected profit margin projections by cutting their price targets on Apple's stock. Evercore Partners cut its price target on the stock from $800 to $775, and Raymond James lowered its target from $730 to $700.
Apple's stock dipped below $600 briefly in after hours trading Thursday following the earnings report, but quickly recovered and opened Friday at $609.43 a share. The stock declined in early trading and dropped to as low as $591.80 a share. As of publication, Apple's stock was trading at about $594 a share, down more than 2% on the day.
The company's stock passed $700 for the first time ever in mid-September on the hype for the iPhone 5 launch, but plummeted shortly after the new phone was released as multiple reports suggested that supply constraints were limiting sales.