Tuesday, September 10, 2013

Apple's announcing a new iPhone. Guess what their stock is gonna do. Part 2.

The iPhone 5S and iPhone 5C were unveiled between 1PM and 2PM ET.  Right after, a precipitous drop 3-4% occurs. 

In part 1 of this post, we took a look at Apple stock the day before the unveiling of the iPhone 5S and iPhone 5C.  Looking at historic unveilings, we predicted that in the 15 days following the unveil, it's likely that Apple Stock will fall by at least 5%.  In this post, we're going to describe what happened today as the unveiling happened.

The unveil occurred between 1PM and 2PM ET today.  The chart above shows that the price held steady until the end of the presentation, but then started the characteristic fall.  All in all, the drop was from about $506 to as low as $489, in the space of about 30 minutes.  That's a 3.4% drop in a very short time.  There was a short bounce thereafter up to $499, and the day ended at $494.

The post-unveil drop was indeed significant.  But, our historic analysis showed at least a 5% drop is expected 5 times out of 7.  So, is Apple's price going to fall even further?  A perusal of the coverage from CNet, EnGadget, and other sites shows a fairly uniform reaction to the new phones that can be summarized with:

  • The 5S is certainly an improvement in design with its much faster processor, better camera, fingerprint security, and new colors, but many iPhone 5 owners won't think it's worth upgrading until larger screens and longer battery life appear in the iPhone 6.
  • The 5C does make iPhone ownership more affordable, but its price is higher than we thought (only $100 less than the 5S), which casts doubt on if it'll be adopted as quickly as Apple hopes in emerging markets (China).
  • The news that the iPhone 4S will be offered now for free with contract is actually the big news for money saving.  In many ways, that deal is the real economy iPhone deal.  But, is that deal available in emerging markets?  That wasn't clear.
  • iOS7 looks like the really big change of all announcements, but it'll be available in lots of phone models.   What makes the iPhone 5S and 5C special?
The bottom line is that there is uncertainty about if Apple will be able to cash in on these new models.  Markets go in one direction when there's uncertainty.  Down.  So, it's probably a good bet that we are looking at further drops in Apple stock.  We'll have to wait and see.  

The third and final post will look at what happens with Apple stock in the next 15 days.  Does it indeed take a tumble?  Is it a good idea to buy when it does?  Stay tuned.

No comments:

Post a Comment