The Immediate Repercussions of the iPhone 7 on Apple Stock

By Aaron Varghese,   
Money and Investing Writer

Just a few weeks ago, Apple Inc. (NASDAQ: AAPL) released its latest generation of the iPhone.

The new iPhone 7 and iPhone 7 Plus feature enhanced processing speed, better audio and camera resolution, and a water-resistant body.

In addition, Apple has removed the headphone jack to create more space for the new engine that provides haptic feedback for the new home button.

Additional new products alongside the new iPhone 7 and 7 Plus include the Apple Watch Series 2 and the upcoming wireless Apple airpods.

With such a major release, Apple would be bound to yield some sort of      immediate increase in its stock price.

Sure enough, this increase is being observed currently. From September 9 to September 15, Apple witnessed its stock prices increasing from $103.13 to $115.57. This is the highest Apple stocks have been since December 2015. Since September 15, stock prices fell by about 1 dollar and have remained relatively static. On September 22, Apple stocks sold at $114.62.

The interactive data-analysis platform, Trefis ©, revealed that over 50 percent of Apple’s revenue is generated through the sales of its iPhones.

These high levels of revenue generated from the iPhones make the release of the iPhone 7 and 7 Plus all the more crucial for the long-term prosperity of Apple this fiscal year.

Some analysts fear that the immediate stock increases following the release of the iPhone 7 and 7 Plus may be short term.

Cell phone carriers have been initiating trade-in plans so that individuals with previous generations of the iPhone can exchange their iPhones with the latest generation at a reduced cost.

The ability to pre-order the new iPhones also opened the door for increased sales for Apple. These plans and pre-orders, of course, are creating a significant surge in demand for the iPhone 7 and 7 Plus.

However, the plans are expected to come to an end sometime next month, removing a significant factor that helped to increase the demand for the iPhone.

Apple will have to make sure that they can compensate for the natural decline in demand that will occur once the initial frenzy regarding the new iPhone’s release fades away.

The difficulty of this task primarily depends on how consumers react to the iPhone 7 and 7 Plus. It is still very early to determine if the overall consensus regarding the new iPhones are very positive or simply average.

As of right now, the trends of Apple stock prices display similarities to the trends of its stock prices last year when the iPhone 6s was first released. Stock prices following the September 2015 release of the iPhone 6s witnessed almost identical initial rise in stock.

By October and November 2015, the Apple stocks witnessed a major peak in stock prices that reached $122.57 by November 3 2015.

What makes this generation’s iPhone release different from last year’s release is the Apple Watch Series 2 and the Apple airpods, which are expected to be released this October.

These new devices can also help improve the revenues of Apple and potentially create another surge in stock prices.

However, should demand of these objects or the iPhones fail to keep momentum, Apple may only find themselves currently experiencing a short term moment of glory that will inevitably end in a fall in stock prices that can only be restored with another new innovative product.

 

A version of this article appeared in the Tuesday, September 27th print edition.

Contact Aaron at
aaron.varghese@student.shu.edu

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