Apple stock (AAPL) struggles after iPhone 6, Watch release (+video)
Apple's unveiling of the hotly anticipated iPhone 6 and Apple Watch sent Apple stock up almost 3 percentage points, but shares have fallen in the hours since. Why does Apple stock struggle after product launches?
The wait is finally over. Apple (AAPL) released its new iPhone 6 Tuesday, along with the long-awaited Apple Watch.
"I hope you'll agree, they're the best phones you've ever seen," said Tim Cook, Apple's CEO, during the event. Initially, investors seemed to agree.
As of mid-afternoon, immediately after the announcement, the company's shares were up 2.50 percent on the day, putting the stock over the $100 mark. But in the hours since, Apple shares have tumbled 0.38 percent on the day. Historically, Apple stock has struggled immediately after product launches; if you exclude the 8.3 percent increase after the first iPhone was released 2007, shares have fallen an average of more than 1 percent during each subsequent product unveiling, according to data compiled by USA Today.
Still, analysts are bullish on the company long-term. "I believe if Apple delivers what everyone says they will deliver – two phones, one watch, mobile payments, iOS 8 and new OS/X – they will have a blockbuster next few months" Ken Dulaney, vice president and analyst at Gartner Research, a technology research firm based in Stanford, Conn., said in an email before Apple's event.
There was a lot of anticipation ahead of today's events. In Manhattan, a line of people waited outside the Apple Store to buy the new iPhone before it was released. Investors are expecting that anticipation will mean huge profit for Apple.
"Investors are probably buying just because they see lines of people in front of the Apple Stores," says Peter Cohan, visiting lecturer in strategy at Babson College. " [But ultimately] it boils down to how many phones analysts expect Apple to sell and whether Apple exceeds those expectations."
Apple stock struggled last week following the release of nude celebrity photographs that were stolen off the iCloud. The release of the photos caused an uproar among users who were worried about the security and privacy of Apple products and sent company shares falling 4.22 percent.
The next month is important for Apple. On average, Apple's stock falls 1.4 percent in the 30 days after the announcement, and last year shares fell 3.3 percent in the 30 days after the announcement of the iPhone 5S and 5C. So far, Tuesday's market movements are hewing closely to the trend.
“More often than not, the stock has rallied in the month leading up to the event and declined in the one week and one month after the newest iteration was unveiled,” Bespoke co-founder Paul Hickey wrote to clients, according to The Wall Street Journal.
Overall, Apple has had a good year. The stock price has increased more than 25 percent since January of this year. It was doing so well that Apple announced a 7-for-1 stock split to lower the price from $646 to $93. Even if you're an average investor, Apple stock could be a good choice.
"We think investors should stick with Apple despite the potential for a sell-on-the-news reaction [following the unveiling]," UBS analyst Steven Milunovich said in a research note Monday, according to Investor's Business Daily.
IPhones will be available for purchase Sept. 19.