Apple Inc. (AAPL): What’s the Deal With 10% Stock Drop?

Apple Inc. (NASDAQ:AAPL) had positive momentum on its side leading up to the launch of the iPhone 5, and it showed in its stock price, which climbed to an all-time high of $705 per share, which made it the most valuable company in the world based on market capitalization. That peak occurred just before the launch of the new smartphone. And while sales of the new device shattered records in the first weekend and have been strong in the two weeks since, the stock price has dived nearly 10 percent in the last couple of weeks.

What in the name of Steve Jobs is going on with Apple Inc. (NASDAQ:AAPL) stock? While it is sometimes hard to determine a true root cause – besides just simple profit-taking – there are analysts who have been trying to explain the drop in such a way to keep investors from wringing their hands raw. Certainly there are long-term investors like billionaire fund manager Julian Robertson of Tiger Management who aren’t wringing their hands, but stil may be interested to hear explanations as to the drop in price, and where it may go from here.

An analyst at Sterne Agee sent a note to investors Tuesday that tried to settle anxiety. “With press reports focusing on employee disputes at key partner Hon Hai Foxconn and some minor product complaints including scratches and ‘purple flare,'” he wrote, “we have been getting many questions on whether this has impacted iPhone 5 supply and demand.”

The analyst answered that question with several observations of Apple Inc. (NASDAQ:AAPL) and its supply chains and production lines. First, there is no reported drop-off in the supply chain, with the bottleneck that was in components moving to the assembly of the iPhone 5. Second, Apple Inc. (NASDAQ:AAPL) has such high standards for its devices that the variance is not just in millimeters, but microns; and third, it is high demand that is putting Apple Inc. (AAPL) shipping times still at three to four weeks.

In addition, Sterne Agee keeps optimistic words about Apple Inc. (NASDAQ:AAPL) in terms of the impending launch of the iPad Mini, as WApple ordered 10 million units for the holiday season, though a final retail price has not been announced yet.