Apple Inc. (AAPL) typically holds an iPhone event once a year, in September, announcing its latest and greatest models. To say that these events are watched closely by investors, reporters, tech nerds and pop culture enthusiasts alike is an understatement. They are a legitimate phenomenon.
There are a few reasons behind the hype: They’re rare, they often unveil new features that surprise and impress us, and they have profound implications for the future of Apple and the AAPL stock price.
About two-thirds of Apple’s revenue currently comes from the iPhone, so if its next smartphone looks like it could be a dud, investors need to know.
But Apple is departing from its normal release cycle, and is expected to announce new iPhone and iPad models on March 21. Obviously, this dilutes the rarity of the annual iPhone event … but could it be worth it? Given what’s currently going on at Apple — and what the tech community expects from the event, I think the decision should be a definite positive for Apple stock.
Apple Is Going to Loop Us In
It’s no secret that AAPL stock is in desperate need of a catalyst. Apple is down 16% in the last year, making shareholders, who are used to exceptional returns year after year, quite jittery.
So what can investors expect from the March 21 announcement?
Apple always comes up with some cheeky little phrase that it slaps on invites to its announcement events. Usually it contains some hint of what the event will discuss. Last March, Apple sent out invites to an event that would unveil the Apple Watch with the text “Spring Forward.”
This year, the invites say, “Let us loop you in.” While the speculation over what that might mean is far from exciting — The Verge thinks it could portend the comeback of the lanyard loop that the iPod Touch used to have — the details of the new iPhone should have anyone with a stake in Apple excited.
Tim Cook and his team are expected to show off a new 4-inch iPhone, dubbed the iPhone SE, that will be a mixture of the iPhone 5’s physique and the iPhone 6’s features. Additionally, the new iPad is also expected to be a smaller, 9.7-inch version that may be an extension of the iPad Pro line.
And, as The Verge also points out, that means that Apple will unveil “a much more powerful 9.7-inch iPad than what Apple currently has on sale. It also means some interesting things for the Air line, should Apple really launch this one under the Pro name: it cements a clear division between Apple’s high-end and low-end tablets.”
If true, I think both releases should be net positives for AAPL stock.
Bottom Line for Apple Stock
There’s definitely latent demand out there for a smaller iPhone; we haven’t seen a 4-inch model since 2013, and many Americans have Trump-like hands incapable of comfortably utilizing larger-sized phones.
As for the clear delineation between the iPad Air and iPad Pro lines, hopefully that will help prevent some cannibalism, and maybe even help revive the languishing iPad segment, which Tim Cook has suggested will be revived soon.
We’ll have to wait another 10 days to see. Hopefully the whole “loop” concept is a little more exciting than a lanyard, but I’m not optimistic.
The big news here will be how both of these products are received after the event, and given the market’s need for a smaller iPhone in particular, I think Apple stock holders will end up cheering the move in the months ahead.
As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at firstname.lastname@example.org.
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