Later today, Apple (NASDAQ:AAPL) is set to reveal its eagerly anticipated iPhone 15 product line, accompanied by next-generation watches and AirPods. Bloomberg News reports that the iPhone collection will feature two entry-level and two high-end models. Historically, Apple’s product launches have triggered stock sell-offs, but savvy investors have often found buying opportunities in the weeks following these events.
Apple’s stock typically experiences an upward trajectory in the months leading up to a product launch. However, this year has proven to be an exception. In August, Apple shares retreated following its third consecutive quarter of declining sales and a bleak outlook for the current quarter, influenced by an industrywide slump affecting demand for phones, computers, and tablets. Additionally, Apple’s stock took a hit this month amid concerns about potential government restrictions on iPhones in China, which happens to be the company’s largest international market. Since reaching a record high on July 31, Apple has seen a staggering loss of nearly $300 billion in market value.
Looking at the broader picture, September has consistently been the least favorable month for Apple over the past five years, with an average loss of -4.5%, compared to a drop of -3.2% for the S&P 500 Stock Index ($SPX) (SPY). In contrast, October has proven to be the best month for Apple stock, boasting an average gain of +3.8% over the same period. Deepwater Asset Management suggests that long-term Apple investors may view these pullbacks as opportunities, especially if they see Apple evolving into a consumer staple company.
Despite recent challenges, Apple’s stock has managed to achieve a remarkable +38% gain this year. Currently, Apple is valued at 27 times projected profits, which is a decrease from the peak of 30 times in July but still considerably higher than the ten-year average of 18 times. Analysts, as reported by Bloomberg, anticipate a rebound in the company’s annual revenue in 2024 after experiencing a roughly -2.9% decline this year. CFRA Research believes that Apple’s decision to increase the prices of its premium iPhone models will serve as a positive catalyst for the stock.
Since 2016, Apple’s iPhone sales have plateaued at approximately 200-220 million devices annually. Nevertheless, the company managed to offset this slowdown in sales by raising the prices of its high-end models. As a result, annual iPhone unit sales have remained stagnant over the past seven years, while revenue has grown by approximately $70 billion during the same period. Mahoney Asset Management maintains optimism regarding Apple’s new product lineup, suggesting that the recent performance could potentially set the stage for a rally in October and the year-end.
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