Buy the dip?Interestingly, the last time Apple shares were trading at this level was back in 2012, shortly before the launch of the iPhone 5. The stock dropped sharply in late 2012 and early 2013, and has only recently recouped those losses. In fact, Apple shares tend to decline after the company releases a new iPhone, as Crabtree Technology portfolio manager Barry Randall recently pointed out. Then, Apple shares eventually start rising again after the post-launch dip. The chart below from Phys.org shows how Apple shares have reacted to iPhone launches. The stock is currently back to about $700 on a pre-split basis:
Record iPhone sales projectedOn Wall Street, some analysts are predicting record-breaking sales out of the gate for the iPhone 6. For example, RBC Capital Markets estimates iPhone sales could hit 10 million units in the first week, and 75 million in the first quarter.
" As great as this would be for Apple, one thing is certain - every new iPhone model has experienced a better start than its predecessor," says Felix Richter at Statista.
Product buzzFor Apple shareholders, the stock has delivered a total return of 27% so far this year, and the company reported solid fiscal third-quarter results. Yet the bigger story continues to revolve around buzz for its upcoming products such as the iPhone 6, new iPads and a possible iWatch, according to Morningstar analyst Brian Colello, CPA.
"Management has set a bullish tone for its product pipeline and for revenue growth this holiday season," Colello said in a recent note. "One concern around iPhone growth stems from changes to wireless carrier plans in the U.S., but Apple commented that programs like AT&T Next, which allow for early upgrades, are a net positive for the firm," he added. "Combined with ongoing traction at China Mobile and reports that the firm is asking its suppliers to build over 70 million new iPhones for its impending launch, Apple may be well positioned for hearty sales growth later this year."Indeed, investors will be watching early iPhone 6 sales as a leading indicator for how the rest of 2014 and 2015 could play out for Apple. Apple is a widely owned, and the largest stock in the highly traded PowerShares QQQ ETF ( QQQ) at more than 13% of the Nasdaq-100 index. It remains to be seen whether Apple shares will pause at the nice round $100 level, or keep powering higher. If previous iPhone launches are any indicator, the stock may be due for a short-term breather. Continue learning: 6 things to know about the iPhone 6 launch (and Apple stock) —
The post The iPhone 6 launch: Hot-or-not for Apple’s stock? appeared first on Smarter Investing Covestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures. For information about Covestor and its services, go to http://covestor.com or contact Covestor Client Services at (866) 825-3005, x703.