Apple(AAPL) - Get Report took a major hit Thursday, with shares plummeting by more than 2.5% at one point. That brought the Cupertino, Calif. tech giant's market cap down to $493.8 billion, briefly placing it below Alphabet as the world's second-largest company. That was before Apple's stock rose again near the end of the day.
Apple finished the day down 2.37%.
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However, now is not the time to give up on Apple. It is still one of the world's greatest companies and an excellent place for your investing dollars. It has a lot of cash for developing new products and will introduce a new edition of its popular iPhone in a few months.
Today's drop came courtesy of poor earnings results not from the company itself, but from two of its major suppliers. Taiwan-based Foxconn Technology reported that its profit dropped by 9.2% in the first quarter. And Pegatron, also based in Taiwan, reported that its first-quarter profits had fallen by more than 35%. In addition, both Sharp and Japan Display, which supply components for iPad screens, reported net losses for the quarter.
Apple's stock has fallen by more than 14% since the beginning of the year. Disappointing earnings and tepid sales of its flagship iPhone have dragged on the stock.
For the second quarter of 2016, revenue declined 13% year over year, to $50.56 billion. And iPhone sales dropped by 16%, to 51.2 million units. Apple depends on the smartphone for nearly 65% of its revenue, so limp sales can impact the company's bottom line.
However, Apple is one of the world's most profitable businesses. Its free cash flow is out of sight, and the company is currently resting on about $230 billion in cash and investments on its balance sheet.
It is not the first time that Apple stock has tumbled significantly. In the mid 1990s, the company was generating losses. It rebounded after famously rehiring Steve Jobs in 1997 and took off on on one of the most remarkable growth phases in corporate history. Until his death in 2011, Jobs oversaw the introduction of such transformational products as the iPhone, iPod and iPad.
In the company's current period, Apple Watch and Apple Pay have yet to make their marks on the stock. E-payments, which is currently dominated by PayPal, could provide Apple with tremendous growth as more merchants begin accepting Apple Pay. In addition, the next model of the Apple Watch is due out later this year. A recent survey showed that 62% of current Apple Watch owners are eagerly awaiting the new version.
When Apple releases its next blockbuster product, which could be the next-generation iPhone 7 later this year or the iPhone 8 next year, Apple stock will shoot right back up. And those investors who have gobbled up shares now will be poised for spectacular profits. Apple is simply one of the best companies on the market and its stock will continue to follow suit.
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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.