If history is any guide, Apple stock will go up in the next few days, between today’s official launch event and the actual on-sale date of the new iPhone 7.
According to UBS analysts Steven Milunovich and Benjamin Wilson, AAPL obeys a rough pattern around new iPhone releases: The stock dips immediately before the launch event, when CEO Tim Cook walks on stage and introduces the new model. Then, between the event and the first day of sales, the stock goes up. After that, there is a dip and then a recovery when Apple reports its next quarterly earnings.
Their research showed:
- For the iPhone 5, 6, and 6s the stock was up 4% on average from event to launch.
- In the last four launches AAPL was down on average 4% two weeks after launch.
- In the last three cycles AAPL went up an average of 2% in the two weeks leading up to earnings.
Here are some charts showing that:
iPhone 6s, 2015
iPhone 6, 2014
iPhone 5s, 2013
iPhone 5, 2012
Making short-term bets on stock movements is fraught with peril. What about the long-term, for investors who want to buy and hold?
The iPhone 7 launch is crucial for the company because its sales are in decline and it is not clear how Apple will get out of this rut until 2017, when a much more dramatic update to the iPhone is expected. AAPL closed at $108.18 last week. It started the year at about $105, so its performance year-to-date has basically been flat.
Business Insider looked at the price of Apple stock for all iPhone releases from iPhone 4s onwards, and calculated whether the launch of an iPhone is good or bad for the stock if you bought it on the day the new phone was released and held it until the day of the release of the next device, roughly a year later.
Here’s a chart of AAPL’s progress (click to enlarge):
The numbers show that the launch of a new iPhone is not a solid guide to the direction of AAPL afterward. Although the stock generally rises, it lost 32% of its value in the year after iPhone 5 and gained only 16% after iPhone 6s. From that launch until today AAPL has given up another 4%:
- iPhone 4s Oct 14 2011 – $55.19 (baseline)
- iPhone 5 Sept 21, 2012 – $91.96, up 67%
- iPhone 5s Sept 20, 2013 – $62.86, down 32%
- iPhone 6 Sept 19, 2014 – $97.19, up 55%
- iPhone 6s Sept 25, 2015 – $112.31, up 16%
- Today, iPhone 7, Sept 7, 2016 – $107.70, down 4%
Generally, Apple’s stock rises nicely. It has gained roughly double its value from iPhone 4s through to today.
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