How Does Apple Inc. (AAPL) Stock React to iPhone Releases?


Every iPhone release has an impact on Apple Inc. (NASDAQ:AAPL), and shares tend to follow certain patterns around the announcement and release dates. With this year marking the 10-year anniversary of the iPhone, Apple is expected to release three new models, including the special-edition iPhone 8. Due to this, AAPL stock will likely behave a bit differently this year.

How Does Apple Inc. (AAPL) Stock React to iPhone Releases?

Source: Shutterstock

Even so, this pattern will probably still play a role in what the shares do in 2017.

10 Years of AAPL Stock History

One thing that should be noted when tracking Apple before and after an iPhone announcement is that the company gradually shifted the launch dates over the early years.

After revealing the original iPhone in January 2007, it unveiled the iPhone 3G in June 2008. The iPhone reveals remained in June until the iPhone 4s, which was announced in October 2011. With the iPhone 5, the announcements shifted to September, where they have since remained. This year it’s probably still too early to say, but most generally expect the iPhone 7s and 7s Plus and the iPhone 8 to be revealed in September.

The first iPhone was revealed to the world in January 2007 after long-running rumors, and it was released on June 29, 2007. Since then, AAPL stock is up some 600% on a split-adjusted basis, and its chart shows a steady upward march with a couple deep valleys when zoomed out to 10 years of history.

AAPL stock chart

Source: Google Finance

The two main valleys that you see were in 2013 and 2016, as AAPL stock started dropping off in late 2012 after the release of the iPhone 5, then in August 2015 ahead of the iPhone 6s and 6s Plus.

However, 2016 was really more of a lackluster year ahead of huge gains this year in anticipation of the tenth anniversary iPhone 8.

What Happens to Apple Stock Leading Up to a New iPhone?

In the days leading up to the original iPhone release, AAPL stock was on a steady decline during the tail end of the holiday shopping period. Things were more even the following year with the iPhone 3G reveal in June 2008, but with the iPhone 3GS the next year, Apple ticked higher about 10 days before the announcement.

Ahead of the iPhone 4’s release in 2010, Apple stock bounced around, although it was range-bound with brief touches above the split-adjusted $100 a share mark. However, the shares were trading higher more than 30 days before the announcement. Recall that Apple split its stock in 2014, handing out seven shares for every one share.

The iPhone 4s was revealed in October 2011, and AAPL climbed between 30 and 20 days of the announcement, although it fell for roughly 10 days before the big reveal. With the iPhone 5 in 2012, Apple shares ticked higher leading up to the announcement. The year of the iPhone 5s, they began to decline about a week into the month of the announcement and continued to tick gradually lower until the day of the announcement.

The iPhone 6 and 6 Plus were released in 2014, and this is the year most analysts are comparing this year with. Anticipation was running high then because of the constant reports that Apple was finally entering the phablet market and even giving the screen size of the standard iPhone a bump up. There was a rather steep increase in AAPL stock through much of 2014 leading up to the two iPhones’ release.

Then we get into 2016, which as was already mentioned, was somewhat lackluster. Apple shares gradually trended lower before bottoming out in May. In the 30 days leading up to the announcement, shares trended higher but suddenly turned lower just ahead of the reveal.

What Happens After an iPhone Reveal?

Kensho data reveals that Apple stock declines 80% of the time the day a new iPhone model is revealed, which tracks with the “buy on the rumor, sell on the news” trading philosophy.

Last year when the iPhone 7 and 7 Plus were unveiled, the shares bucked this trend and ticked nearly half a percent higher. Not only did AAPL go against this trend, but it also ran against another one.

Seventy percent of the time, Apple falls the day after the event. However, last year, the shares rose continued to climb for several days afterward before coming unglued. The only other times there was a major drop between the day of an announcement and the day after were the iPhone 5s and the original iPhone.

Why the iPhone 7 Had an Unusual Effect on AAPL Stock

The problem last year was probably that management revealed that they wouldn’t announce first-weekend iPhone sales. Instead, they rested on vague statements, like their expectation that they would sell out of the iPhone 7. They also said that they expected the iPhone 7 and 7 Plus to be “incredibly popular.”

Because the decision not to reveal first-weekend sales for the iPhone 7 line-up proved to be so unpopular, one can hope that Tim Cook and Company will not make the same mistake again. Wall Street began to wonder whether the iPhone had peaked in popularity, especially given that unit numbers declined for the first time during the iPhone 7 cycle.

Of course, if the iPhone 8 sells so well during the first weekend, one would think Apple management would proudly trumpet that before the whole world.

iPhone 8 Has Already Been Driving Shares

Although most years, AAPL stock has been driven by anticipation for the next iPhone cycle, this year, we’re seeing a much greater level of anticipation because of the high bar that’s been set for the iPhone 8. The tenth anniversary model is expected to be the first which sports an OLED display, but that’s not the only thing that has analysts practically salivating at the thought of it.

Many are also expecting some amazing augmented reality feature, especially since the reveal of ARKit in iOS 11. There’s debate about whether the fingerprint sensor on the iPhone 8 will be embedded in the display, placed on the back, or simply left out entirely in favor of better biometric technology.

So we’ll just have to wait and see what the company reveals this year and what the ultimate impact will be on Apple stock, but there’s no doubt that it’s already been driving the tremendous climb we’ve seen this year.

The post What Happens To AAPL Stock Around iPhone Releases? appeared first on ValueWalk.

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