Whenever I’m speaking to people about AAPL they tend to ask the same question. Apple just released a new phone, should I buy into their stock now since there will be an influx of sales? The gut reaction I, and many other people within the industry have, is that the future sales are already baked into the share price. That said, this is a very testable idea, so let’s actually put it to the test.
Apple has consistently increased in price since the original release of the iPhone, and is now the most valuable company in history, but how much do their new phones REALLY contribute to that price? We are going to use stock information based on the release date of each generation since the iPhone 5 and see how much the stock changed over the next month.
Apple’s Many Releases
iPhone 5 – September 21, 2012
We aren’t getting off to that great of a start for this hypothesis. On the release of the iPhone 5, the price of Apple fell 13%. The S&P index also fell during this time by roughly 2%. It isn’t uncommon for Apple to move with the general market within a short time frame, such as this; Apple has a daily correlation with the market of 0.89 since 1995.
iPhone 5C, 5S – September 20, 2013
This is the time where Apple began to make improvements to the usability of the phone by being the first major company to add a fingerprint scanner to their device. With this innovation, does the release help Apple’s share price in the short term?
It appears that innovation really pays off – especially when the innovation comes from a company historically known for changing the way we as people interact with the world. During the month following the release, AAPL did extremely well returning 12% where the market only returns 3%.
iPhone 6 – September 19, 2014
This release marked the first “Plus” phone which has become a premium version of their standard phone. It is also this time that the price of an iPhone began to drastically increase. During the previous generation the most expensive phone (5S) was $399, while the highest spec price for the iPhone 6 was $849 for the standard size and $949 for the plus. How did the minimal performance increases and the increase in price affect the share price after the release?
Surprisingly, or unsurprisingly, The share price actually increased over the following month. The increase wasn’t as smooth as when the 5C and S were released, but it still ended up returning 7% over this time frame.
iPhone 6S – September 25, 2015
This release was a bit smaller than the previous ones as there weren’t as many new features being adding to the hardware. Regardless Apple was still able to generate a positive return over the next month – though they did underperform the general market.
iPhone SE – March 31, 2016
This release is one that I personally found incredibly interesting when doing research for this article. Apple appears to be teasing the idea of doing a release twice a year. This ultimately flopped as the phone only accounted for about 10% of all iPhone sales in 2016.
With this release Apple also took a major hit to their share price losing 17% of their value and breaking away from their usual high correlation with the market.
iPhone 7 – September 16, 2016
The day the headphone jack died. Apple continued their new pricing model – where top end phones would cost you around $1,000. Though there was a massive blowback surrounding the headphone jack, it didn’t take consumers long to accept the fact that they needed either a dongle or a set or wireless headphones.
iPhone 8 – September 22, 2017
The last generation of the classic iPhone looks. Released just a month prior to the iPhone X this phone is the last generation with the home button, and it has been reported that it will not be returning to the design anytime in the near future.
Though Apple followed the S&P pretty closely for most of the month we watched, it did break away towards the end. This, though I’d like to attribute it to iPhone 8 sales, is likely because of Apple teasing the release of the iPhone X.
iPhone X – November 3, 2017
The most current flagship phone received mixed reviews, as did the company’s share price. It was Apple’s first attempt at a bezeless design – including nothing on the front of the phone except for the small “notch” for the camera. That notch was one of the big issues people had with the phone; where people asked why they didn’t just include a bezel across the top. The added breakability to their new $1,000 phone was also a big worry for many consumers.
iPhone XS – September 17, 2018
Over the next month we will be tracking the price of $AAPL and noting how well, or poorly, it performs.
It is apparent that Apple is highly correlated with the overall market, and that’s to be expected. Once you grow to such a size as Apple it’s difficult to not follow the market or have the market follow you. At the end of the day, it does look as if a release of a new iPhone is helpful for the stock price, but it’s up to you to decide if those increases are just due to the market or because of the release of a new, exciting technology.