Apple Inc. (AAPL) Potential Stock Reaction To iPhone 5S, 5C Launch

Apple Inc. (AAPL) Potential Stock Reaction To iPhone 5S, 5C Launch
<a href="">ElisaRiva</a> / Pixabay

When Apple Inc. (NASDAQ:AAPL) unveils the iPhone 5S and 5C tomorrow, what’s going to happen to its stock? Deutsche Bank analysts examined the last six iPhone launches and charted what happened to Apple Inc. (NASDAQ:AAPL) shares around the times of each of those launches.

Apple Inc. (AAPL) Potential Stock Reaction To iPhone 5S, 5C Launch

Apple investors sell on the rumor, buy on the news

It is frequently said within the financial industry that investors should buy on the rumor and sell on the news. However, when it comes to iPhone launches, this doesn’t appear to be the case most of the time. In fact, in four out of the last six launches, Apple Inc. (NASDAQ:AAPL)’s share price actually went up on the day after the launch.

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apple Index Price chart for iphone lauches

However, analysts Chris Whitmore and Joakim Mahlberg say significant gains were not seen in the stock for months after the launch of the new handset. They note that over the short term, new iPhone launches have had a relatively small impact on Apple Inc. (NASDAQ:AAPL)’s share price. On average, the stock traded up about 1 percent the day after the announcement, 2 percent after five trading days and then down 2 percent a month after the launch.

They note that Apple Inc. (NASDAQ:AAPL)’s share price shows more significant returns six months or more from the launch date of the new iPhone models. At six months post-launch, shares were up an average of 14 percent, largely because strong sell-through has become apparent by this time.

Apple Indexed price chart

Strong stock run ahead of Apple event

The analysts note that the last month has been the second strongest one-month performance before all iPhone releases. They said this recent run could create a “sell the news” event even though they remain optimistic around the new iPhone product cycle.

As of this writing, shares of Apple Inc. (NASDAQ:AAPL) were up almost 2 percent, suggesting that at least a few investors were buying on the rumor ahead of tomorrow’s event.

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