Apple stock plunges amid celebrity hacking, ahead of purported iWatch announcement

September 4, 2014

Knowing our secrets are safe. Knowing our data is secure. Knowing our intimate photos aren’t being used as porn by misogynistic Redditors or idiot trolls on 4chan.

These things are priceless.

More quantifiable was the downward lurch Wednesday that pushed the market value of Apple down by $26.1 billion.

That’s the price tag USA Today put on the drop in Apple’s stock price on Wednesday. The cost of a share of America’s largest company — AAPL to traders — fell by more than 4 percent to $98.94. That’s Apple’s largest decline since January.

And the price drop wasn’t just because a leak of naked celebrity photos was attributed to a hack of Apple devices, according to market watchers.

The drop came on the day that arch-rival Samsung debuted new smartphones and a virtual reality headset,” said Silicon Beat, “threatening to steal some of Apple’s thunder ahead of a high-profile event scheduled for next week.

Some other data points of note:

  • Apple lost more Wednesday than the market value of half the S&P 500
  • The company’s lost pushed the S&P into the red. The index lost 1.56 points — had Apple not changed, it would have been up 1.41 points
  • $26.1 billion is more than the entire value of Whole Foods or Macy’s
applestock

Apple is still about 30 points above its 52-week low. Its stock price hit an all-time high on Tuesday. Sure, Samsung just announced the Galaxy Note Edge phone, but Apple is still the dominant player in consumer tech. And it still has a much buzzed-about super-secret event scheduled for Sept. 9 that probably has something to do with a new iPhone and the iWatch.

While the coverage of the drop invariably mentioned the hacking, many analysts quoted Wednesday doubted that it was that significant. Trip Chowdhry at Global Equities Research told Marketwatch that while the hacking was “unpleasant … it shouldn’t be considered a ‘Wow’ event. The real excitement is what will happen next week.”

“We think Apple has little room for error in delivering on a spectacular iPhone 6 launch,” Brian Colello, analyst at Morningstar, told USA Today. “Concerns over iCloud have hit at the worst possible time for Apple – a highly publicized flaw that’s making the news a week before a major launch.”

The iWatch — or whatever the wearable tech Apple will debut in less than a week will be called — will likely be the moment when computers stop being something we merely use and start being an extension of our bodies. From here on out, we’re on the road to digital utopia or “Minority Report.” Users have to believe Apple will take them to the former, not the latter.

And the company starting this revolution does not want a massive leak of skin pics mucking up its reputation the week before the first shot is fired. Apple may not be to blame, as it’s said, when the woman who plays Katniss Everdeen stands naked to the world against her will, but it cannot be surprised when it gets punished in the markets and the commentariat goes 0n the hunt.

Craig Ferguson: ““Just yesterday, the iCloud started raining nude celebrities.”

Conan O’Brien: “It’s rumored that next week the new iPhone is going to come out. It’s going to come with a larger screen, more memory, and it can leak celebrity photos twice as fast.”

Apple said Tuesday that its iCloud systems have not been breached and that thieves stole celebrity photos from Apple accounts by targeting individuals, not by breaking into the company’s infrastructure.

After more than 40 hours of investigation, we have discovered that certain celebrity accounts were compromised by a very targeted attack on user names, passwords and security questions, a practice that has become all too common on the Internet,” the company said in a statement. Apple said that it is working with law enforcement to help identify who took the photos.

But suspicion lingered.

International Business Times: “In the wake of the leaked celebrity images earlier this week, it will be more difficult than ever for Apple to convince customers that putting personal information about their health and fitness into iCloud is safe and secure.”

Business Insider: “Most people will think, ‘If Apple can’t be trusted with photos, can it be trusted with banking data and health data?’” 

The Washington Post’s Hayley Tsukayama: “Just as the company wants consumers to let their smartphones run more aspects of their lives, Apple is facing a backlash.”

This backlash may not leave much room for the corporate showmanship that Steve Jobs first unleashed upon the world when he unveiled the MacIntosh computer 30 years ago. The company may be building a mysterious white monolith in Cupertino, Calif., and releasing blank invitations to media ahead of its Sept. 9 iWatch announcement, but the media and perhaps customers and investors next week may be just as interested in whether they can safely hand over personal data to a business once among the world’s most trusted.

In other words, Apple users may stop seeing the corporation as a family member and more of a service provider. Indeed, after the alleged hack, the company dispensed with theatrics to do what every business does when faced with scandal: damage control.

We take user privacy very seriously and are actively investigating this report,” a spokesman said on Monday.

Justin Moyer is the deputy editor of the Morning Mix. Follow him on Twitter: @justinwmmoyer.
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Caelainn Hogan · September 4, 2014