Apple is biggest superstar stock to collapse
It's easy to ignore the market's troubles - as long as your hot stocks aren't affected. But a surprising number of former superstar stocks aren't just getting sucked into the market's declines - but leading them.
The count of former leading stocks that are now suffering big-time is swelling as the market struggles. There are 102 stocks in the Standard & Poor's 500, including Apple (AAPL), Urban Outfitters and computer chipmaker Skyworks Solutions (SWKS) that are down 10% or more from all-time record highs set this year after just setting those this this year, according to a USA TODAY analysis of data from S&P Capital IQ. A 10% decline is an important measure - since it's the unofficial definition of a correction.
The pain gets even deeper. There are 18 stocks in the S&P 500 that set record highs this year that are now down 20% or more from those all-time highs. Talk about a fast and painful reversal: Going from being a leading stock - to one that's down 20% or more. A 20% or greater decline is the unofficial definition of a bear market.
Such rapid deterioration in stocks that were leaders is a big warning sign to investors. "There's still denial going on, but this is what happens in late stages (of bull markets), says Ken Winans of Winans International. "The darling stocks start to get hammered."
The biggest and most dramatic example is gadget maker Apple. Rising fears of a slowdown in China coupled with the fact more U.S. carriers are doing away with smartphone subsidies is turning the market's biggest winner into one of its biggest losers. The fear is consumers may decide to keep their smartphones longer when they realize how much they're actually paying for them. Shares of Apple are down 16% from their all-time high price of $134.50 notched in April.
It's a dramatic reversal in momentum - as shares of Apple skyrocketed nearly 60% in the one year prior to hitting a high. Now, the stock is barely up on the year - clinging to a 1.8% gain. Apple stock closed down $2.36, or 2.1%, to $112.65 Thursday.
Another high-profit fallen leader is Disney. Shares of the entertainment giant soared 43% in the year leading into the stock setting an all-time high on $122.10 on Aug. 3. But now, this former leader is down 18% in just weeks following the high - pushing this darling dangerously close to a 20% bear market. The stock is still up 6% this year - but the size of the outperformance continues to fade.
Apple and Disney may be the biggest and most high profile examples of fallen leaders, but they're not alone. Huge winners like video-streamer Netflix (NFLX) and Amazon (AMZN) - which both put up huge gains leading up to new highs - are down 13% and 11%, respectively from those highs. And these aren't even the most severe examples. The fallen leader that's given investors the biggest percentage jolt is trendy apparel retailer Urban Outfitters. Shares of the stock are now down 36% from their all-time high of $47.30 on March 20. The retailer's stock fell 68 cents, or 2.2%, to $30.27 Thursday.
Investors who picked speculative and relatively obscure stocks in hot markets are feeling the pain, too. Shares of the semiconductor designer Skyworks Solutions had been up an astounding 138% in the year prior to hitting an all-time high of $112.90 on June 19, 2015. But the reversal has been painful - as the stock has now lost 27% of its value since that high. Shares Thursday traded down $4.79 a share, or 5.5%, to $82.44 a share.
It's possible that some of these leaders will regain their winning ways. But seeing leaders falling apart is a warning sign. "When this market goes blow up, it will be a textbook top," Winans says.