Apple (AAPL) plans to announce the newest version of their iPhone tomorrow (September 10th). Historically, the time leading up to these announcements has seen the stock down in the week and day before. With AAPL up over 2.25% over the past week and also up 0.6% today, the current situation is most similar (in terms of stock price) to 2016 when the company announced the iPhone 7. The stock is similarly weak on the day of new iPhone announcements. The only substantial gain on an iPhone announcement was in 2007 when the company unveiled the very first generation. Other than that, there were only two other times that AAPL moved higher when a new model of the iPhone was unveiled. Fortunately, over the following day and week, the stock’s performance is a little better with gains slightly more than half the time. One month later, though, a period that usually covers the entire span between the announcement and the time the phone typically hits shelves, the probability of a positive response is no better than a coinflip and AAPL is down an average 31 bps.
The release (when the phone is actually available for sale) of previous generations of the iPhone have typically come within the month that it gets announced. Following these releases, AAPL’s stock typically makes its way higher over 70% of the time in the week and day before. Immediately after the phone is available for sale, though, AAPL consistently falls. The first day the new version of the iPhone is for sale, AAPL stock averages a decline of a quarter percent while the median is even worse at -0.77%. AAPL also consistently is negative both that day and the following day. Performance one week and one month later is similarly weak, but it has also been positive a little more frequently. Even one month out, though, AAPL was only higher half of the time. Headed into tomorrow, AAPL is coming off of one of the worst post-release stock price responses to a new iPhone. Last October saw the release of the most recent iPhone, the iPhone XR. One month later, the stock was down over 20%. No other release has seen a subsequent decline of nearly that much.
As shown in the chart below, since the company unveiled the very first iPhone back in 2007, iPhone announcements and releases for the most part, do not mark any major tops or bottoms for the stock. Only the aforementioned release of the iPhone XR and the iPhone 5 in 2012 resulted in a short to medium-term peak for the stock. Over the long run, even these poorly received products did little to completely break the stock’s long term uptrend that has been in place for many years now. Since the announcement of the first iPhone, AAPL has risen over 1500% which is more than ten times the gain in the S&P 500 over that same span. Start a two-week free trial to Bespoke Institutional to access our interactive Security Analysis tool and much more.