Why the Party Could Be Winding Down for Apple's Shares
September 10 2019 - 4:52PM
Dow Jones News
By Corrie Driebusch
As consumers celebrate the unveiling of Apple Inc.'s 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 climbed 1.2% to $216.70 Tuesday -- their biggest
gain during an iPhone special event since the unveiling of iPhone 5
in September 2012.
The stock rose 6.6% in the month ahead of the debut, 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
.
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, rising 37%, 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. "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 16:37 ET (20:37 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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