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Summary

  • Apple shares generally perform better leading up to an iPhone release than after the release.
  • If we discount the very first iPhone release, on average the stock went down immediately after each iPhone launch.
  • For the last four years, AAPL lost 4.4% on average in the month following an iPhone release.

It appears that the iPhone 6 launch date will be September 9th or perhaps a bit later than that depending upon which rumor mill you choose to follow. What is more important to investors is how Apple (NASDAQ:AAPL) stock will perform before and after the launch date - whenever that may be.

Progress, far from consisting in change, depends on retentiveness. When change is absolute there remains no being to improve and no direction is set for possible improvement: and when experience is not retained, as among savages, infancy is perpetual. Those who cannot remember the past are condemned to repeat it. - George Santayana

(Known also in its paraphrased form of "Those who fail to learn from history are doomed to repeat it.")

As always, the past gives clues to the future. So with that in mind, let's look at previous iPhone launches and see how the stock performed one month previous to the launch to one month after launch.

Prepare yourself for many charts!

The first chart pertains to the first generation (known as 2G) which debuted on June 29, 2007:

AAPL Total Return Price Chart

AAPL Total Return Price data by YCharts

Apple traded mostly sideways for about three weeks leading up to the launch date, then the stock launched right along with the phone, rising from $16.58 per share on June 29 to $19.54 on July 27 (the 29th was a Sunday). One post-launch month gain = 17.9%. Two month gain = 25.7% ($15.54 to $19.54).

The 3G iPhone came out on July 11, 2008. The stock price one month before to one month after:

AAPL Total Return Price Chart

AAPL Total Return Price data by YCharts

Once again, we see mostly sideways trading leading up to the launch date. However, this time Apple tanked about 10% in the following three weeks. By the end of the post-launch month the stock recovered. One post-launch month gain = 0.6% ($23.45 to $23.58). Two month loss = 4.0% ($24.57 to $23.58).

The 3GS iPhone released on June 19, 2009. The stock price one month before to one month after:

AAPL Total Return Price Chart

AAPL Total Return Price data by YCharts

On this one we can see that there was a bit of excitement about 3-4 weeks before the release followed by the usual sideways trading in the last 2-3 weeks leading up to the release. A couple of weeks after the launch the stock popped up. One post-launch month gain = 8.8% ($18.95 to $20.62). Two month gain = 19.1% ($17.32 to $20.62).

The iPhone 4 came out on June 24, 2010. The stock price one month before to one month after:

AAPL Total Return Price Chart

AAPL Total Return Price data by YCharts

This time period shows more volatility than usual and a break from the previous three patterns. The stock went up leading to the launch, but fell after the phone came onto the market. One post-launch month loss = 3.4% ($36.55 to $35.32). Two month gain = 5.3% ($33.53 to $35.32).

The iPhone 4S came out on October 14, 2011. The stock price one month before to one month after:

AAPL Total Return Price Chart

AAPL Total Return Price data by YCharts

The 4S chart is similar to the 4 chart in that the stock popped up before the launch and fell after it. In this case the stock rose over 14% in just five trading days before the launch of the phone. Then the stock tanked right back down again. One post-launch month loss = 10.0% ($57.24 to $51.53). Two month loss = 2.6% ($52.89 to $51.53).

The iPhone 5 release date was September 21, 2012. The stock price one month before to one month after:

AAPL Total Return Price Chart

AAPL Total Return Price data by YCharts

One again we see the disturbing trend: up before launch followed by a steep decline. One post-launch month loss = 12.9% ($95.53 to $83.21). Two month loss = 7.0% ($89.52 to $83.21).

Lastly, the iPhone 5C and 5S release date was September 20, 2013. The stock price one month before to one month after:

AAPL Total Return Price Chart

AAPL Total Return Price data by YCharts

This latest launch broke the 3-year pattern of a lower stock price post-launch with a decent rise in Apple stock. One post-launch month gain = 8.9% ($65.30 to $71.09). Two month gain = 1.6% ($70.00 to $71.09).

Conclusion

For all seven past iPhone releases, Apple stock has averaged total gains of 5.4% in the two-month period that covers before and after the phone launches. However, most of those gains have occurred in the month leading up to the launch. Post-launch one-month gains have averaged 1.4%.

Taking out the very first launch - I think it is reasonable to postulate that the first iPhone data tells us little about what to expect going forward - and averaging the last six years results in a post-launch loss of 1.3%. Using data from the last four years results in an average loss of 4.4% in the month following a new phone release.

Take a close look at the post-launch stock moves for year 2008 (3G), year 2009 (3GS) and year 2013 (5C, 5S). Those are the years (again, not counting the very first launch) in which Apple stock showed a gain in the month following the launch date. In every case, most of the gains occurred in the fourth week of the month. In other words, if I ran my study for three weeks post-launch instead of a full month, the average price decline would be higher.

If the last six years of history have taught us anything it is that:

  1. AAPL is likely to decrease in the month after an iPhone launch.
  2. Even if the stock is up for that time period, in the 2-3 weeks post-launch AAPL is unlikely to make a substantial move to the upside.

Furthermore, for the last four launches, every time that Apple stock has increased pre-launch, the stock has tanked post-launch (an average drop of 8.8%). Can we make a prediction for the iPhone 6? Here's how the stock has performed since August 9th, which assuming a launch date of September 9th will be the start of the one-month per-launch time period:

AAPL Total Return Price Chart

AAPL Total Return Price data by YCharts

The fact that the stock is up strong pre-release could bode ill for Apple post-release.

It must be noted that my thesis is dependent upon few data points and ignores any factors other than iPhone release dates and previous stock prices. News about other Apple products could have had affected the price of AAPL. Macro events could have had their effects.

It should be noted that I am bullish on Apple long-term. Nonetheless, any investor who is on the fence about selling some Apple shares or is considering selling covered calls might want to think long and hard about September 9th, or whatever date turns out to be the iPhone 6 release date.

Source: Apple: Sell The Stock On September 9th