$86 Billion Loss in 2 Weeks: The Writing on Tim Cook's Wall

Some of us have been predicting this for years… though billions around the world thought it would never happen.

Apple (NASDAQ: AAPL), once the mightiest tech brand in the known universe, has finally hit a wall it simply cannot go through.

The company released its quarterly earnings report earlier this week, posting its first quarter-over-quarter revenue decline since 2003.

That’s the first such decline since before the crash of 2008 — the first such decline since before the introduction of the company’s two current biggest-selling devices: the iPhone and the iPad.

This disappointment wasn’t a shock to everyone, of course. Apple shares have stumbled from $112 less than two weeks ago to less than $96 today — a 14% loss, which equates to over $86 billion in market capitalization.

$46 billion of that $86 billion vanished just over the last three trading sessions alone, as analysts picked apart the facts, spread the panic, and helped convince investors to cut and run.

Of course, the diehards and loyalists will point out that Apple’s been in this sort of trouble before.

This Isn’t Just Another Speed Bump… It’s the End of the Road

The company was anything but immune to the Great Recession, which took about 42% of its market capitalization with it as the stock dropped from $95 to $56.

But nobody was immune to that. Companies and consumers alike, everyone lost.

Which brings us to the company’s previous brush with death, which came just as Steve Jobs was returning to steer the ship in 1997.

The company, which now boasts a world-famous cash reserve of close to $200 billion, came within just 90 days of going bankrupt.

The problem then was a lack of innovation in its products — a topic I’ve written on repeatedly in the past.

As modern legend goes, Steve came back just as Apple was rounding the last turns of the drain. He brought it back to life and, within a few years, into prominence with a new and world-changing line of products and services.

Today, almost five years after Steve made his permanent exit… after almost a decade of market saturation by the iPhone… after six years without a major new product rollout (the iPad being the last true standalone, niche-creating device Apple has brought into the market)… we’ve finally seen the first signs of its mortality as a company.

What’s Coming Next? Failure or Rejuvenation?

Well, the hope is that it takes that $200 billion nest egg and either acquires or researches and develops its way back into profitability.

And with that much money, a whole lot is possible.

CEO Tim Cook has already stated a renewed commitment to more acquisitions, but is it already too late?

The problem, once again, and the problem the company will never avoid, is that without true direction — the kind Steve brought — it’s just another huge tech company.

Another enormous tech brand that, unlike major competitors like Google (now Alphabet Inc.) (NASDAQ: GOOG) and Samsung, has always drawn the lion’s share of its revenue from just a handful of products.

Samsung, by comparison, has hundreds of products under its umbrella. Alphabet typically acquires more companies in a single year than Apple has in its entire history.

And yet the most famous of them all won its top spot with just a few devices, all sharing the same basic design concept.

Unfortunately, the “too big to fail” myth has also been applied to the fate of Apple by an appallingly wide spectrum of investors.

How long have we known that it’s not producing anything revolutionary or even reasonably priced at this point?

How long have we known that its main source of innovative inspiration is no longer around?

The answer to both is years. And yet it took that earnings report to finally put the stock back into the trajectory where it belongs.

If this is truly what many think — the first death spasms of an icon — then it’s also going to represent one of the most visible and market-changing trends in recent history.

Trends like this don’t come around often, which means when they do, they need to be used.

But how?

One Trend… Many Alternatives

Investors who insist on squeezing more winnings from this over-the-hill and now diseased horse do have options, of course.

There’s probably going to be a dead-cat bounce at some point. In fact, I’d wager there will be a series as the stock trends downwards.

And of course, you can always short it to your heart’s content — even leverage that short — and pray to god that the company falls flat.

The problem with playing the death of Apple is that the profits may take time — years, even — and in the meantime, if it manages to right the ship for one more chance at greatness, well, you’ll be looking at leveraged losses, not gains.

The best way to play this Apple trend may be a bit counterintuitive, but it requires that you stay away from Apple altogether.

The biggest profits to be had will come not from Apple stock or Apple shorts but from Apple’s replacements… the companies that will take its spot as the top innovator in the consumer tech realm.

One of those companies, though you’ve almost certainly never heard of it, is already in the process of unseating the most popular and most important device: the market-dominating iPhone.

Earlier, I told you that Apple’s main problem is innovation… that its products aren’t making the quantum leaps they were once famous for.

Well, this company has already made the next quantum leap, and if you think its iPhone killer is going to be just another smartphone, you’re in for the surprise of a lifetime.

Fortune favors the bold,

Alex Koyfman

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