Why the Party Could Be Winding Down for Apple's Shares
September 10 2019 - 12:03PM
Dow Jones News
By Corrie Driebusch
As consumers await Apple Inc.'s unveiling of the new iPhone 11,
investors best beware.
The tech giant's stock tends to rise an average of 4.6% in the
month leading up to announcing a new phone, only to fall an average
of 0.7% in the month following the reveal, according to Dow Jones
Market Data.
The last two launches followed this pattern. In the month
leading up to the release of the iPhone XS, XS Max and iPhone XR,
Apple shares climbed 7.9%, only to fall 0.8% in the following
month, Dow Jones Market Data show. For the iPhone 8, 8 Plus and
iPhone X, shares rose 2.6% leading up to the announcement, only to
fall 3.4% in the month following.
Apple shares were off 0.4% at $213.36 Tuesday morning. In the
past month, they have risen roughly 6.6% through Monday's close,
more than the S&P 500's 2.1% gain in that same period.
Part of that rise is directly related to the new iPhone launch,
set for later Tuesday.
According to a note from Wedbush analyst Daniel Ives, roughly
one-third of the company's 900 million active iPhones globally are
in a "window of an upgrade opportunity," which could mean big sales
are ahead for Apple in what Mr. Ives calls a "crucial product
cycle." Wedbush estimates that translates into roughly 180 million
iPhone units that could be sold in 2020.
That doesn't necessarily mean smooth sailing for Apple. The
stock has had a strong run in 2019, up more than 35% through
Monday's close, but plenty of threats loom. For one, the potential
for U.S. and China tariffs ratcheting higher could dent Apple
profits, as the company assembles most of its products, including
the iPhone, in China.
Still, Wedbush's Mr. Ives said in his note that he is optimistic
heading into Tuesday's announcement. "Overall, we view this week's
launch as putting fuel in Apple's growth tank which is much needed
as Cupertino [Apple headquarters] navigates mature secular
smartphone headwinds which are being exacerbated by the US/China
high stakes tariff poker game," the note said.
Write to Corrie Driebusch at corrie.driebusch@wsj.com
(END) Dow Jones Newswires
September 10, 2019 11:48 ET (15:48 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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