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Later today, Apple (AAPL) is scheduled to unveil its new iPhone 15 product line, along with next-generation watches and AirPods. According to Bloomberg News, the iPhone lineup will include two entry-level and two high-end models. Apple’s new iPhone debuts have historically been a sell-the-news event for the stock, but the weeks following the launch have been a better opportunity to buy the stock dip.
Shares of Apple typically move higher in the months ahead of a new product launch. This year, however, has been different. Apple shares retreated in August after it reported its third straight quarter of declining sales and predicted a similar performance this quarter, hurt by an industrywide slump that has dented demand for phones, computers, and tablets. Then, this month, Apple stock took a hit amid concerns about government restrictions on iPhones in China, the company’s biggest international market. Apple has lost nearly $300 billion in market value since closing at a record on July 31.
More generally, September over the past five years has been the worst month of the year for Apple, with the stock averaging a loss of -4.5%, compared with a drop of -3.2% for the S&P 500 Stock Index ($SPX) (SPY). However, October has been the best month for Apple stock, with an average gain of +3.8% over the same period. Deepwater Asset Management said, “If you’re a long-time holder of Apple and you see this as becoming a consumer staple company, these pullbacks are opportunities.”
Despite recent headwinds for Apple, the stock is still up +38% this year. Apple is priced at 27 times projected profits, down from a high of 30 times in July but well above an average of 18 times over the past ten years. According to Bloomberg data, analysts expect the company’s annual revenue will bounce back in 2024 after falling about -2.9% this year. CFRA Research said the action by Apple to raise the prices of its higher-end iPhone models will be a positive catalyst for the stock.
Apple’s iPhone sales began to plateau in 2016 to around 200-220 million devices annually. However, the company the company boosted the prices of its higher-end models to make up for the slowdown in sales. Annual iPhone unit sales have remained stagnant over the last seven years, but revenue has grown about $70 billion over that timeframe. Mahoney Asset Management remains optimistic about Apple’s new product lineup and said the recent performance has “hopefully set the stage for an October and year-end rally.”
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
