Apple Stock Plunges on Cyber Monday

The cause behind the tech giant's sudden $40 billion stock plunge is revealed.
3:00 | 12/01/14

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Transcript for Apple Stock Plunges on Cyber Monday
And then that's when new York and as the financial markets close in on Wall Street for this Monday December 1 this story stock. Had apple apple apple investors starting to sweat. Forty billion dollar plunge after the market opened today in then. A quick rebound. So the question is what's going on what you explain it all market analysts pierce crossing from stocked with spears thanked me with us today and then determine. So listen so apple soccer body today but what caused the sudden drop of it what 9:15 this morning. Yep so it everything went down basically at 951 and essentially what happened is being attributed to high frequency traders as far as we know. So essentially Morgan Stanley release are import sometime early this morning and the recommendation was essentially to their investors. That you should probably pull back a little bit on your holdings of Apple Stock so. What happened was is at first we saw some some mild selling and then all of a sudden this huge crash rates so. What happens is is in high frequency trading there is I'm certain triggers that if if the stock like apple with to get to a certain level. There automatically told the cell. And so all of a sudden all these programs are selling on top of each other and what you have is a huge selloff I mean we Sox essentially at the peak. I'm forty billion dollars worth of Apple's value completely wiped off the books and so. The rebound is essentially those robots. Re correcting themselves which is. Something that you know I mean people say is kind of bad for the markets but that's that's just the state that we live in the though the way that is Renault is our natural stopped them from us. Yes so I think that this stop was some kind of put in place. And and can an in my point of view I think that you know around the 111 level is something that was considered to be a technical support level and a lot of people started buying and the bottom and so. All of a sudden the programs reverse themselves and lo and behold we bounced back and now I think we're only down you know two and half percent something like that. Much more menial than the previous. Correctional. Okay so when you have to live without them and I'll see you studies for the programs and algorithms in place that are might be taking the actual reports were that kind of reasoning out of it then. How quickly then can investors go back in and say well wait a minute this is actually just kind of the system and not necessarily a rational decision of. Behavior him well I think that I mean it's really underpinned by the people that are watching the markets and so. I mean for your average mom and pop investor there's this really means nothing but but for someone who's trading the stock may be you know on a weekly basis. You know there was an alert that went out essentially on stock twits and all of a sudden it was our top trending. You know stock on the on the platform and so. You know that happened around 1015. And and since then you'll been buying the stock because they realize the correction is essentially nothing mess so. You know I think that you know the sooner you have a chance signature kind of feeling of what's going on the markets the matter so so that's we kind of provided our investors went. All right and obviously innocent that we try to rapper has around incident appropriate time but. But as you can kind of you know called Assad on understand that you know fact that that is just the system that's in place right now. Listen and as I mean you know it's crazy because you know you could say even five years ago you know percentage of the NYSE and NASDAQ were really traded on electronic but. But I mean less and less people are now down on the floors in the exchanges and in reality be in place of them are robots that basically hang out New Jersey and trade off one another it's it's all kind of infatuated in reality the the feed the markets are are much less liquid than you would think because. It's just it's just a bunch of robots you know bouncing stocks back and forth by the which is but what yes what. We judge who she was showing video of actually like computer room in Jersey someplace right as opposed to actual traders on the floor and a well I think that's that's the events NYSE today and I mean if you compare that to say you know even ten years ago its way less populated and was. You know it's just. Instead it's just ten server room so right you know take it is it is I think that there's value to 22. You know technology itself so. It's hard to kind of fight the you know kind of the eventual process that we're going and bottom that said. Things like this can happen at any given day and you know a lot of people can lose money very quickly I know. One small town in restaurants stocked with that I'm you know essentially couldn't hold his position long enough and so he was stopped out. And yet it's just a huge amount of money lost that that didn't have to be you know kind of filter to elect. Right aren't. You're scrubbed from stocked with spears thanks so much appreciate have a Cyber Monday been with us and I'll try to and tune in now. Right thanks this election stories dot C with ABC news dot company latest headlines and Dan Butler New York.

This transcript has been automatically generated and may not be 100% accurate.

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