18 SEPT, 2023
By Luis García Langa, Markets Director of SDC Analistas
The "iPhone 15" is about to be announced and many investors may see this as a buying opportunity.
This is one of the many mistakes investors make, thinking that an event known to everyone gives an advantage (or disadvantage) to a stock price. Some examples are: in summer, tourism companies should go up, or at Christmas, consumer companies should go up; however if everyone knows about it, is it really news to be taken into account in the stock market?
Of course, the iPhone is a very important product for the company led by Tim Cook, not in vain it represents more than 50% of the company's total, the rest being divided between services, accessories, Mac, and iPad.
It has also been noticeable in its share price: from the IPO, back in December 1980, until the announcement of the first iPhone (in January 2007) the revaluation had been 2072.90%; while from that day until the time of writing this post the rise is 6,850%.
But let's see what happens in the days after the announcement (we have taken as a reference that day and not the day it was put on sale, with some exceptions, one or two weeks pass between the two days):
Apple share price performance post-iPhone Launch
-----------------------------------------1 month later--------------------3 months later--------
Source: SDC Analistas - Created with Datawrapper
It seems that the short-term market does not take the announcement well and, in most cases, 30 days later the price is underperforming (often in that time the particular device goes on sale).
In fact, out of 19 announcements (including special editions and counting as one when several devices are released on the same day), 14 have a negative result one month later. Explanation? There could be several: inflated expectations, disillusionment with new services, how many times have we heard disillusioned users say, "It's practically the same!", moves by large investors taking advantage of the naivety of small ones… whatever the reason, the result is negative.
And it is even more negative considering that we are talking about a company that has gone up for much longer than it has gone down: it has increased in value by more than 270,000% since its IPO.
Things change if we look at a slightly longer term: of those 19 times, 13 times it has been revalued 3 months later, something that would be a little more normal for a company that has risen so vertically in those years. From a broader perspective, it can be seen that the presentations have not been very decisive in Apple's life on the stock market:
As can be seen in the graph, the most vertical rise occurred in 2016, a somewhat different year for Apple: on the one hand, it presents two different models in the same year, as in March it presented the iPhone SE 1st Generation (Special Edition).
But curiously, it coincides with a "bad" economic moment: it is one of the few years in which it does not increase profits, specifically EBITDA decreased by 14.50%, going from earning 82,487 million dollars in 2015 to "only" 70,529 in 2016.
As can be seen in the table, this is the worst stock market performance 30 days after a presentation and one of the worst 90 days later, which seems to be more related to the company's accounts.
In recent years, Apple has twice gained less from one year to the next: in 2019, a good year after the iPhone 11 launch, and in 2022, it suffered in its post-earnings trading. Although last year was a bit different, it came from a spectacular 2021 (it improved its EBITDA by 55%) and we all suffered from inflation and historic rate hikes.
It seems that looking at the data, the answer to the question we asked at the beginning of the post is negative: there are no special reasons to buy Apple when it presents an iPhone, nor hotels or airlines in summer or consumer spending at Christmas (which does not mean that they are not bought or that it is not a good time, but not for that reason). Obviously, analysts and managers already know that this happens, the important thing is to see if this seasonality is better or worse than expected, and looking at Apple's results, it is usually better.
Now, we are at an important moment for Apple as there are two important events.
On the one hand, the post-2022 recovery has been spectacular, in fact, the record highs set in December 2021 - January 2022 were surpassed (remember that to overcome the 32% fall it had to rise by almost 48%), greatly adjusting the ratios at which it trades. On the other hand, there is the recent conflict with China and the government's ban on its workers carrying iPhones in public buildings, which has caused a significant fall and is testing the support of 181.50 dollars (precisely the old historical maximum):
Of course, this ban seems anecdotal in terms of Apple's accounts, but China must be closely monitored, either because of this type of veto or because of its economic problems (or possible expansion, depending on who is analyzing it); since the Asian giant (including Taiwan, Hong Kong, and Macao) represents almost 19% of its sales.
By RankiaPro Europe
By RankiaPro Europe