Not everything Apple touches is gold

5 Stunning Apple Stats
5 Stunning Apple Stats

Slap the word "Apple" on a piece of technology, and it seems like a guaranteed success. But investors learned the hard way Monday that Apple's Midas touch only goes so far.

A year ago, GT Advanced Technologies (GTAT)-- "GTAT" as its known among traders -- was a rising star in technology and investing circles. Shortly after Halloween, the company inked a multi-year deal with Apple (AAPL, Tech30) to be one of its suppliers.

GTAT produces a type of screen made of sapphire that is extremely durable. Sapphire screens have already been used in some Apple products such as cameras. The company's stock surged more than 150% as people speculated GTAT's sapphire would be a key part of the iPhone 6.

But that never happened.

On Monday, the company filed for bankruptcy.

Related: Does the iPhone 6 bend? CNN tests

There's no other way to say it -- investors got screwed. GTAT stock plunged over 90%, erasing over $1 billion in shareholder value. Someone who owned a mere hundred shares of the stock would have lost roughly $1,000 Monday.

poisonous apple

"GT expects the court will authorize the company to continue to conduct business as usual while it devotes renewed efforts to resolve its current issues and develops a reorganization plan," the company said in a news release Monday.

At the end of September, GT Advanced Technologies said it had $85 million of cash on hand. It is now seeking additional financing.

The news took many traders and investors by surprise.

Related: Wall Street's beer goggles are clearing up. Now what?

"$GTAT poking a few holes in the efficient market hypothesis theory," said TripleDTrader.

Perhaps Stocktwits user StockosaurusTex said it best: "$GTAT sorry longs.. what a scary lesson!"

It's easy to write this off as tech stock speculators getting burned. But GTAT had become a big enough name that it was even included in the S&P 1500 composite index and some ETF funds such as the Guggenheim Solar ETF (TAN), since GTAT also makes solar panel components. The Guggenheim fund is down more than 4% because of the loss.

Several law firms, including Tripp Levy and Johnson & Weaver, are looking into possible violations of federal securities law by GT Advanced Technologies.

"Johnson & Weaver's investigation seeks to determine whether certain statements regarding the company's business and prospects were false and misleading when made," the firm said in a release.

Apple did not return CNNMoney's requests for comment.

The GTAT debacle is a reminder of the need to diversify any stock portfolio...and that some apples have a poisonous backbite.

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