There are numerous opinions - some even incredulous - as to why Apple (NASDAQ:AAPL) shares have recently been peeled back from their 52-week high of $705 into the $400's. One proposed reason? Apple CEO, Tim Cook, has an unfortunate case of bad juju: Stay Home, Tim Cook.
Some even feel that Apple's stock drop has a lot more to do with a presumptuous little feature known as Autocorrect: Duck you, Autocorrect!
Practical theories and jokes aside, the most compelling seems to be that it's the fault of the company's competitors. But interestingly, over the past several weeks, analysts have literally chopped up the company's fellow smartphone providers, including Nokia (NYSE:NOK) and BlackBerry (NASDAQ:BBRY).
Google (NASDAQ:GOOG) isn't left out of smartphone conversation either - the company has continued to benefit from the rapidly growing market for smartphones, and shares could provide investors with a nice return - especially if it finds a way to better monetize Android OR more appropriately, as it now seems; through the power of a tweet.
Yet, even with some very convincing arguments, I tend to believe that Apple's competition is much less to blame for its stock price free-fall than Apple itself - primarily because all these companies essentially face the same product and industry related issues. So, why is it that Apple's shares seem to be the struggling so much more than the others?
Nokia Is Not to Blame
Let's start by taking a closer look at the other key smartphone providers across the globe. First up is Nokia. The shares of this company have taken a bit of a nose dive after they reached a 52-week high of nearly $5 back in January of this year. Since that time, though, Nokia's shares seem to have settled momentarily in the $3.50 range.
Although many investors are selling off their Apple shares, it's not likely that they are replacing them with shares of Nokia. This is likely because Nokia's shares aren't looking too profitable at the moment. The stock is trading above its 1-year target estimate of $3.30. On top of that, the company offers no dividend - so investors aren't even able to gain an income even if they take a chance on future share growth.
At the moment, it appears that the only real interest in Nokia is on the short side, which remains very high for these shares. This is likely due in large part to the expectation by analysts of further downside. This, coupled with an earnings per share in the negative, just doesn't paint a pretty picture for this smartphone company's shares.
Then It's BlackBerry's Fault.
This can't be true. BlackBerry itself has been struggling for some time now. And, despite the fact that the company introduced its new Z10 phone earlier this year - which has incidentally received very good reviews - more than 82% of U.S. smartphone users didn't even know that this phone existed. This is despite an array of online and TV campaigns, and even tangible ads at high traffic areas such as bus stations.
To add salt to BlackBerry's wounds, according to Barrons, roughly 68% of consumers weren't even interested or curious about this new device.
When respondents were asked "Are you interested in, or at all curious about" either of the phone families, BlackBerry or Windows Phone, the respondents said "No" 68% of the time for BlackBerry, and 63.9% for Windows Phone.
It has been estimated that in order to stay competitive in the industry, BlackBerry's new Z10 would need to sell approximately 2 million units per quarter - which is just a small fraction of either the Samsung (OTC:SSNLF) Galaxy S or the Apple iPhone figures. This has led analysts, as well as potential investors, to be somewhat skeptical about BlackBerry shares.
Similar to Nokia, BlackBerry's shares have seen a substantial amount of short interest -- near a multi-year high. The stock reached a solid $18 per share early this year, but since that time it has seen a considerable amount of both high volatility and volume.
Oh, I know! It's Samsung, The iPhone Slayer!
Over the past few months, analysts fervidly pressed the idea that Samsung is taking on Apple like a man with a billboard for a face beats on his enemies with a croquet mallet.
Certainly, Samsung made a big splash earlier this year with the release of its new Galaxy S4 smartphone. Although there were some shipping delays prior to the product's roll-out, they were due in large part to the overwhelming demand - so this is not all bad. In fact, for the first time ever, smartphone shipments outnumbered other handsets during the first quarter of 2013.
Samsung has grown its sales at an unprecedented rate in the past few years. The company's market cap is touching $200 billion, and with its shipments jumping more than 60% earlier this year, Samsung owns nearly one-third of the overall smartphone market.
All of these may appear positive - especially given the company's impressive cash flow and steady rate of growth - this smartphone maker is still considered to be trading well below its valuation. In fact, when comparing Samsung's valuations to Apple's, the two are trading in the similar depressed territory. Samsung currently trades at an EV/EBITDA ratio of 6 times, mostly in-line with Apple. Now all of a sudden, Samsung doesn't feel like an "iPhone Slayer" anymore.
All in All
Although the smartphone industry is a fast-growing and hot market, just like ordering food from an ever increasing menu, most of the companies in this sector are still trading as if they are about to go belly up - while analysts simply continue to finger point, blaming all of the other industry competitors for their share price issues.
First it was Nokia that was the Justin Timberlake of the newly born mobile phone industry. Then came BlackBerry as Justin Bieber and built a loyal base of 25 million users. Then Apple won "American Idol" and got popular, but only remained at the top for a short while because Samsung showed up with a freakin' dance crew.
Because the smartphone industry is in a constant state of change, investors are finding it difficult to pinpoint a single viable candidate to park their money, fearing that the shares of many key companies will bounce back and forth like proverbial ping-pong balls for many years to come. Similar to changing lanes in a traffic jam where the lane they just left begins moving, investors in this industry are beginning to feel a bit like a "deer in the headlights" and essentially are doing nothing at all.
So What in the Name of Motorola Can Investors Do Next?
One solution to staying potentially profitable in this rapidly changing arena may be to purchase a small number of shares of all of the companies, rather than putting all of an investor's eggs in one smartphone basket. This could help to ease the pain of a downfall in one firm, while adding to joy - and profit - for the rising shares of another.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.