The problem with highly valued stocks is that they need to keep the good news coming to maintain their lofty valuations.
Apple (APPL) investors are suffering from such a headache, watching the company's shares lose about 25 percent of their value from last year's high. In the first three trading days of 2016 alone, the stock has lost 4.8 percent, declining almost 2 percent on Wednesday on a report the company is slashing production of some iPhone models.
At one point Wednesday, Apple shares dipped below the $100 mark before closing at $100.70 at 4:00 p.m. Eastern Time.
If investors feel like they've played this game before, they're not incorrect. Apple is one of the biggest technology companies in the world and the fifth-most valuable U.S. corporation, so investors are eager to get a glimpse into its health by gauging the health of its production line in China. With more competition in the smartphone market (including from Chinese upstart Xiaomi) and a maturing market, concerns are rising that Apple won't be able to keep up the same pace as in the past.
Those fears were only intensified this week when a report in Japan's Nikkei Asian Review said Apple will cut production of some iPhone models by 30 percent this quarter. Foxconn Technology Group, which assembles iPhones in China, was promised more than $12 million in government subsidies to help alleviate the pain from expected layoffs, The Wall Street Journal reported.
The decline in Apple's stock price illustrates that investors are "bracing for March iPhones well below Street estimates of 58.5 million, with some thinking units could be as low as 50 million," Piper Jaffray analyst Gene Munster wrote in a research report on Tuesday.
He said what Apple will end up producing remains "a wild card," but he added that prior concerns about production reports haven't always proved to be accurate. "History suggests that triangulating news of supplier and production cuts tends to have less correlation to actual reported units," he noted.
Apple is reportedly scaling back production of iPhone 6S and iPhone 6S Plus -- models that were just launched in September.
Apple didn't immediately return a request for comment.
Investors are waiting to hear details about the company's fiscal first-quarter results, which are scheduled to be released on Jan. 26, when Apple will provide guidance about the current quarter, Munster noted. It's possible the stock could see a bounce at that point, he added.
"We note that the best read on overall iPhones is Apple's December guide, and the company has not missed a guide since changing its guidance methods almost three full years ago," noted Munster, who has an "overweight" rating on the stock and a price target of $179.
Still, investors can't be blamed for being worried. The iPhones have ranked as among Apple's most successful products, while newer products designed to diversify the company's product line -- such as the Apple Watch and Apple Pay -- haven't nearly seen the same type of success.
Can Apple communicate that it's worth a loftier valuation? The proof won't be dialed in until the company provides more guidance later this month.