By Corrie Driebusch
As consumers await Apple Inc.'s unveiling of the new iPhone 11, investors best beware.
The tech giant's stock tends to rise an average of 4.6% in the month leading up to announcing a new phone, only to fall an average of 0.7% in the month following the reveal, according to Dow Jones Market Data.
The last two launches followed this pattern. In the month leading up to the release of the iPhone XS, XS Max and iPhone XR, Apple shares climbed 7.9%, only to fall 0.8% in the following month, Dow Jones Market Data show. For the iPhone 8, 8 Plus and iPhone X, shares rose 2.6% leading up to the announcement, only to fall 3.4% in the month following.
Apple shares were off 0.4% at $213.36 Tuesday morning. In the past month, they have risen roughly 6.6% through Monday's close, more than the S&P 500's 2.1% gain in that same period.
Part of that rise is directly related to the new iPhone launch, set for later Tuesday.
According to a note from Wedbush analyst Daniel Ives, roughly one-third of the company's 900 million active iPhones globally are in a "window of an upgrade opportunity," which could mean big sales are ahead for Apple in what Mr. Ives calls a "crucial product cycle." Wedbush estimates that translates into roughly 180 million iPhone units that could be sold in 2020.
That doesn't necessarily mean smooth sailing for Apple. The stock has had a strong run in 2019, up more than 35% through Monday's close, but plenty of threats loom. For one, the potential for U.S. and China tariffs ratcheting higher could dent Apple profits, as the company assembles most of its products, including the iPhone, in China.
Still, Wedbush's Mr. Ives said in his note that he is optimistic heading into Tuesday's announcement. "Overall, we view this week's launch as putting fuel in Apple's growth tank which is much needed as Cupertino [Apple headquarters] navigates mature secular smartphone headwinds which are being exacerbated by the US/China high stakes tariff poker game," the note said.
Write to Corrie Driebusch at firstname.lastname@example.org