Unless you were sleeping under a rock today -- or a cobweb-riddled copy of Windows 98 -- you know that Apple (NASDAQ:AAPL) dipped below $500 this morning.

It's a scary round milestone. Apple hasn't traded under $500 since February of last year. The world's most valuable tech company came close to buckling in November and December, but apparently the third month is the charm.

Is Apple a screaming value or is $400 the next meaty milestone that the stock will hit on the way down?

Let's take a look at the bearish and bullish arguments for Apple here.

The "bye" argument
Apple has given back 11 months of gains, but worrywarts will argue that it's warranted. This isn't the same Apple that was on the rise a year ago.

Today's Apple is losing market share to Google's (NASDAQ:GOOGL) Android and has fallen short on the bottom line in the past two quarters.

The catalyst for today's drop is a Wall Street Journal report claiming that orders to Apple's iPhone 5 screen suppliers have been cut roughly in half this quarter. If accurate -- and the typically reliable financial publication is leaning on two different yet naturally unnamed sources -- it confirms that global demand for Apple's smartphone is waning.

Apple's iPhone 5 may not seem so expensive in this country, where wireless carriers shell out hundreds in subsidies to bring the price down to a competitive $199 per handset. However, in most overseas markets where prices start at $700 to $800 for unsubsidized iPhones, Android smarpthones selling for a third or half of that price will do just fine.

Apple's options aren't very compelling here. It can hold firm on prices, letting Android's global market share continue to expand. It can cut prices, sacrificing its industry-envying profit margins along the way for the sake of maintaining its relevancy. Apple can also introduce a cheaper iPhone -- as many have speculated -- but that will come with the same balancing act as the iPad mini where the price may still be too high or the reputation may suffer if too many features are removed to get to a competitive price point.

If you buy into the bearish argument, Apple has peaked. We're living in Google's Android world now, and Apple may have to keep an eye on the rearview mirror to make sure that Windows or the refreshed BlackBerry 10 doesn't challenge it for a fading second place.

It's not just about price, either. The open nature of Android -- and the closed nature of Apple -- finds the tastemakers of tech siding with Google's platform. When Baidu (NASDAQ:BIDU) decided to introduce its own smartphone platform, it didn't bother to reinvent the wheel. China's leading search engine based its mobile operating system on Android. Amazon.com (NASDAQ:AMZN) made waves with the Kindle Fire tablet two years ago, but that too is just a modified version of Android that plays nicely with many existing Android applications.

Analysts are siding on the "bye" side of the fence, slashing Apple's near-term earnings potential. Wall Street's profit target for Apple in this fiscal year has fallen from $53.44 a share to $48.67 a share in just the past three months. The outlook for fiscal 2014, which kicks in come October, has had a similar makeover. Analysts have gone from forecasting net income of $60.94 a share three months ago to $57.07 a share today.

The "buy" argument
The only thing that has fallen faster than Apple's profit targets is its actual share price. The end result is that Apple at $500 is now valued at just 10.3 times this fiscal year's projected net income and a mere 8.8 times next year's estimate.

The multiples get lower once you factor in Apple's more than $120 billion in cash and marketable securities.

The fears that estimates will continue to whittle lower and that the same Apple that used to routinely beat analyst estimates will keep falling short are reasonable. That's the trend. It's hard to argue otherwise until the trend is reversed.

However, don't underestimate Apple's history of innovation. It's been known to raise the bar, just when it seems as if its products couldn't move the needle yet again.

Here are a few other morsels for bulls to enjoy as they lick their wounds.

  • Apple already has a massive share buyback authorized for this fiscal year, and buying now makes too much sense.
  • The stock's drop has pushed the yield to a savings-thumping 2.1%. Google, Amazon, and Baidu -- tech darlings mentioned earlier -- are Nil City in the yield department. Sure, Microsoft's (NASDAQ:MSFT) 3.4% is far more generous, but let's not pretend that Apple is growing in the single digits the way that Mr. Softy is these days. Analysts still see double-digit growth for the class act of Cupertino.
  • Apple is the richest company in tech. Don't assume that it won't spend its way to acquire growth, especially if a fade in iOS makes it easier to clear regulatory hurdles for acquisitions.
  • Between the inevitable TVs and larger speculative dreams for Apple wristwatches and automobiles, this isn't the end of Apple.

Perhaps most importantly, everybody loved Apple at $700 in September. Everybody hates Apple at $500 now. Do the math. It may pay to be a contrarian here. 

Longtime Fool contributor Rick Aristotle Munarriz has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Apple, Baidu, and Google. The Motley Fool owns shares of Amazon.com, Apple, Baidu, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.