Was Steve Jobs' Retirement Already Priced into Apple Stock?

Photo: Danny Novo

When news broke last evening that Steve Jobs was stepping down as Apple CEO, shares of the company fell by more than 5% in after hours trading. By the opening bell this morning, they’d recovered half of those losses. And during the first hour of trading, shares of Apple were only down between 1.1% and 1.6%.

Compare that to when Jobs announced that he was taking a leave of absence back in January of this year (his third leave since 2004), when shares fell by more than 8%. Within ten days, the stock had regained the lost ground, off news that Apple’s revenue grew 70% in the fourth quarter. Back in January 2009, when Jobs left for health reasons, and ultimately a liver transplant, Apple shares dumped more than 10% in the immediate aftermath. Way back in the summer of 2004, when Jobs first announced that he’d had a cancerous tumor removed from his pancreas, the market’s reaction was a slow sell-off, but nothing too drastic. Back then shares were trading at only around $16, so there wasn’t nearly as much to chew off.

So, the market’s now had seven years to get used to the idea of life without Jobs at Apple. And there still seems to be plenty of optimism about the future share price. Check out the odds from Irish bookmaker Paddy Power on where Apple’s stock price will end 2011.



Mike B

Apple will surely be profitable for some time to come, but without Jobs and his cult of personality it has started on its long march to being just another market player just like it had in the middle of the 1980's. The first casualty will be the sorts of deals he was able to bully his platform partners into accepting which will then deprive the iProducts of many of their structural advantages. Eventually Apple will become a quirky high end retailer, sort of like Jaguar in the automobile market. Their stuff will be great, but increasingly tied into a limited demographic.

Gary L.

It'll be interesting to see how it plays out. Jobs is so central to the success of the company, but then, the great era of innovation we saw from Apple came when the Board got out of his way. I suspect the people at Apple today are more "Jobs-ie" than at any point in Apple's history.

I guess what I'm getting at, is the direction Apple takes in the long run depends on the extent to which Jobs was able to implement permanent cultural change at the company, and whether the people he hired will carry on that tradition. Cook, as a long tenured Apple exec, seems well positioned to carry on the culture in place at Apple. 10 years from now, we may not be able to say that about the heir apparent.

Mike B

Steve Jobs was the only person able to stand up against the modern demands of today's shareholders. As time goes forward, Apples' products will become more and more "managed" and I don't mean the existing product lines, but the new products that don't exist yet. Apple's strength was offering something that nobody else had because only through monopoly can Apple charge its high margins and treat its consumers with a take it or leave it attitude. These breakthrough products were solely the creation of Jobs' mutant visionary mind and reproducing them is like saying you can reproduce Mozart or Shakespeare. The future products will all be the very best that its management and design team can come up with, but every technology company has good management and design teams. Without its super powered leader Apple will quickly regress to the mean.


SJ has made daily calls and decisions during all your examples. When he was sick, they where in a position to ride his momentum. While he will still be doing that as chairman, the moment he stops, entropy will eat at the positive culture changes he has instituted. I don't think anyone else has the right kind of energy to put into Apple to make up for SJ drive. SJ is very charismatic, and a lot of success stems from that charisma,. Cook is excellent at his job, but he doesn't have the charisma.

This is an opinion I have that I hope I am wrong on, but based on Apples history, I doubt it.

Derek Fields

When I see large swings in a specific stock over a short time that result in little net change, I wonder to what extent these swings are caused by program trading reacting to what would be relatively small trades by a few bears (or bulls). If that is the case, then we should be highly skeptical of "rational" explanations of these swings; rather we should accept that unless the SEC chooses to do something about high-speed, program-based trading, volatility is increasing a way of life for the market.