Apple falls close to a freak-out level

Apple (AAPL) fans are still defending the stock - calling it a bargain. The market agreed Wednesday as the stock faced another big test and passed - for now.

Shares of the gadget maker plunged early Wednesday by as much as 3.4% to $93.42. The decline in Apple knocked the battleground stock near the $92 a share it fell to last August during a market malfunction. This freak-out low is the next big challenge for the shares - as investors wonder how low the stock can go. The low held. Shares of Apple Wednesday closed up 13 cents to $96.79.

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Apple remains the most important stock to the entire market. The brutal 30% drop in the stock from its high has erased $224 billion in investors wealth - which exceeds the market value of all but a handful of the stocks in the Standard & Poor's 500. Apple's profits are so large and important, they are expected to account for 7.2% of the operating earnings reported by all the companies in the Standard & Poor's 500, says Howard Silverblatt of S&P Dow Jones Indices.

The stock has gone from a darling to a posterchild of the market's overvaluation. It's not just speculation driving shares down. Signs of demand slowdown for smartphones continues to stoke concern about the company's growth. UBS analyst Steven Milunovich told investors Wednesday the average selling price of the iPhone could be $662 in the December quarter, missing expectations for $680. This seemingly small difference in the average price of the company's smartphone is extremely critical for Apple - which thrives on its ability to charge a high premium for its product despite the availability of lower priced options from other vendors.

Weaker average selling prices - largely due to consumers buying more older iPhone 6 models and fewer iPhone 6 Plus models are a risk to the company's revenue and gross profit margins, Milunovich says. He thinks Apple will report December quarter revenue of $75.6 billion, which would be 1.4% less than analysts expect. He also expects Apple to report adjusted quarterly profit of $3.18, which is 2% below Wall Street estimates.

But Milunovich and most other analysts - despite the historic value crash in Apple - remain firmly bullish about the company and its shares longer term. Wall Street analysts still think Apple shares will be worth $142.91 a share, says S&P Capital IQ.

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Apple faces challenges from every flank

But right now - the question is how long will the Apple implosion last and can the last freak-out low hold?

Matt Krantz on Twitter: @mattkrantz.