Apple lost its title as the most valuable company in the world on Friday.

Apple's market cap plummeted below $420 billion on Friday after a disappointing earnings report earlier in the week, allowing Exxon Mobil to regain its title as the most valuable company by market cap. Apple ended the day with a market cap of $413 billion, about $5 billion less than Exxon's market cap.

The Cupertino company first overtook Exxon in August, 2011, just a few weeks before Steve Jobs resigned as CEO and has held onto it firmly starting in January. Under the leadership of his successor Tim Cook, Apple's market cap continued to grow on the strength of the company's product lineup. At its peak after the iPhone 5 was released in September, Apple's market cap was $656 billion — about $240 billion more than Exxon at the time.

Since then, however, Apple's stock has been plagued by iPhone 5 sales concerns, a shakeup in the company's executive leadership and increasing competition in the smartphone and tablet markets, most notably from Samsung. On Wednesday, Apple reported generating record revenue in the December quarter, but it fell short of analysts' sales estimates for iPhone and iPad. Perhaps more importantly, the company's profits were effectively unchanged from the same quarter a year ago, adding to investors' concerns that the days of Apple's incredible profit growth are coming to an end.

Part of the reason Apple's stock and market cap soared as much as it did was the expectation that the company had more innovative products in the pipeline that would help it break into new markets. Now, according to Forrester analyst Charles Golvin, Wall Street appears to be settling into lower expectations for the company, with the stock's price dropping accordingly.

"It's a reality check on inflated expectations," Golvin says, referring to the significance of Apple losing its top spot for market value. "I don't think it's a portent or a harbinger of diminished impact of Apple on the market." Beyond that, Golvin says that the milestone may be indicative that Apple is no longer miles ahead of its competition. "While they are still an 800 pound gorilla and bringing tremendous innovation and new experiences to consumers, others are starting to catch up to them a little bit and having some influence where they didn't before."

Apple may be fighting for its position as the most valuable company in the world, but it is still far and away the most valuable tech company. Google and Microsoft, the second and third most valuable tech companies, each have market values around $250 billion.

Even so, it's a sharp reversal for a company that some thought was on pace to become the world's first trillion-dollar business.

Image courtesy of Flickr, deerkoski