On September 12th, Apple (NASDAQ: AAPL) held its first ever conference at the Steve Jobs Theater, where the tech firm introduced several new products including the Apple TV 4K, iPhone 8, and the iPhone X, which set the stock market spinning. Apple shares surged almost 2% ahead of the launch on Tuesday. At 1 p.m. shares were trading at $161.37 and climbed to as high as $163.75 during the first half of the event.
However, after Apple began sharing details on the new iPhone X, particularly that it would not launch until the new fiscal year on November 3rd, stocks began to slide to $160.20. Even with this turn of events, shares are still priced near record highs for this year. Keep in mind that Apple has never released an iPhone this late into the year. When the event ended at 2:55 p.m. Eastern time, Apple's market value was an astounding $837.6 billion, positioning it as the most valuable company in the world.
UBS technology analyst Steven Milunovich commented on a pattern in how Apple's stock prices responded to product launches in the past:
Based on the last five iPhone announcements, the stock has a reasonably consistent pattern: down in the two weeks preceding the event; up/down 1-2% the day of the event; up between the event and launch (phone availability about two weeks later); weak in the two weeks post launch; and then up going into earnings.
He continued to mention that there is still a greater near-term downside risk but that the stock is expected to outperform over the next 6-12 months. While USB has an average price target of $180, Wall Street analysts expect $176 (both with a bullish outlook).
Even though Apple's stock id down 2.5% since the launch event, other companies which are part of the tech giant's supply chain are also being affected. The companies to watch for include: Lumentum, 3D sensor which could potentially power the facial recognition technology on the iPhone X; Finisar, 3D lasers that could assist the backside of the iPhone X; Imagination Technologies Group, which specializes in graphics processing technology, among several others.
With the current hype surrounding the iPhone X, Apple could expect to see an explosion in its sales as people rush to replace their older models with the new and upgraded editions. Many analysts are expecting a period of "super-cycle" where demand surges in the first few weeks of the pre-sale period and this can have some profound effects on Apple stock prices. Historically, post product launch, Apple stocks have experienced highs and lows; however, ever since the release of the very first iPhone 10 years ago, stocks have risen 825% which shows how much the company has increased in value despite periodical downturns.
Since most of Apple's revenue last quarter depended on iPhone sales which brought in $54.4 billion (69% of total revenue), Apple looks to expand and boost its revenue by turning to the Services sector such as the App Store, iTunes, and iCloud. With Apple adapting to the changes in the smartphone market and refocusing its revenue strategy, it is quite possible that the company's stock might behave quite differently than it did in the past. As of now, all that we can do is wait and see how consumer and investor actions affect Apple stocks in the long-run.