The iPhone 6 launch: Hot-or-not for Apple's stock?

By John Spence

Apple fans can't wait to get their hands on the new iPhone 6, but the upcoming launch could also provide an opportunity for investors to scoop up Apple shares at a cheaper price.

The stock tends to dip when a new iPhone is revealed, then recover the loss before moving to even higher ground.


Apple is trading around $100 after hitting a record high, adjusting for the company's recent 7-for-1 stock split.

Now, all eyes are on the iPhone 6 launch, and iPhones account for the majority of Apple's sales.

The graphic below from Trefis shows projected revenue for various Apple products, with the iPhone representing the lion's share: (click to enlarge)


Revenue from Apple products, by year


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 shows how Apple shares have reacted to iPhone launches. The stock is currently back to about $700 on a pre-split basis:


Apple share price at each prior iPhone launch


Record iPhone sales projected

On 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 buzz

For 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)


Barry Randall

Barry Randall

Crabtree Asset Management invests in growing technology companies. Barry Randall is the firm's founder and Chief Investment Officer. He has