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Market’s subdued response to iPhone 13 launch is no surprise

Investors often ‘buy the rumour sell the fact’ when it comes to Apple shares

The Apple share price was subdued in response to CEO Tim Cook‘s launch of the iPhone 13, as well as updated versions of its watch and iPad.

The Apple share price even closed down by 0.96% yesterday after Cook divulged some of the new exclusive features of its latest release.

One of the key features of the iPhone 13 is its ability to film “portrait mode” videos with a depth of field effect.

It is only the Apple smart phone which allows users to edit this effect after filming.

This seems to be a common theme for Apple when it releases new products and “as much the result of the old formula of ‘buy on the rumour sell on the fact’ as anything else,” says AJ Bell investment director Russ Mould.

AnnouncedProductLaunched6 Months Before3 Months Before 3 Months After 6 Months After 12 Months After
09-Jan-07iPhone 129-Jun-0743.8%30.2%25.8%63.7%39.4%
09-Jun-08iPhone 3G11-Jul-08(0.1%)(5.9%)(43.9%)(47.5%)(19.7%)
07-Jun-10iPhone 424-Jun-1028.7%17.3%8.7%20.3%21.3%
04-Oct-11iPhone 4S14-Oct-1123.7%18.1%(0.5%)43.4%49.2%
12-Sep-12iPhone 521-Sep-1216.2%69.9%(25.8%)(35.3%)(33.2%)
09-Sep-14iPhone 619-Sep-1429.1%6.7%14.1%8.1%15.8%
09-Sep-15iPhone 6S25-Sep-15(7.0%)(10.0%)(5.8%)(7.9%)(0.1%)
07-Sep-16iPhone 716-Sep-169.1%18.5%(0.3%)(8.3%)51.3%
12-Sep-17iPhone 822-Sep-1718.1%7.1%7.9%12.7%38.5%
12-Sep-17iPhone 8-plus22-Sep-1718.1%7.1%7.9%12.7%38.5%
12-Sep-17iPhone X03-Nov-178.9%2.4%11.4%4.2%37.5%
13-Sep-18iPhoneXS, XSMax, XR26-Oct-1828.2%19.0%(22.6%)(11.0%)(3.4%)
10-Sep-19iPhone 1120-Sep-1925.0%14.8%21.1%31.7%109.5%
13-Oct-20iPhone 1223-Oct-2060.8%30.0%5.2%8.1% 
14-Sep-21iPhone 1324-Sep-2122.4%13.5%   
 AVERAGE 22.5%16.9%3.3%9.3%32.8%
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However, a lot does ride on the latest iteration of the iPhone and shake-up of Apple’s product range.

“The firm continues to encounter anti-trust pressure from regulators regarding its App store – and its monster $2.4 trillion market capitalisation means that any slip or loss of earnings momentum could leave shareholders with a problem,” Mould said.

A forward price/earnings ratio of nearly 27 times prices in a lot of future growth – and analysts have pencilled in just 5% sales growth and 2% earnings per share growth for the year to September 2022.

“Hard to believe as it may be, this leaves Apple with something to prove, in terms of its ability to keep regulators sweet, persuade customers to upgrade to 5G mobile devices and shareholders that expected 70% surge in earnings per share in the year to September 2021 was not just a one-off, owing to the pandemic, lockdowns and a surge in working from home – sales growth in Mac computers and iPads showed marked signs of a slowdown in the last fiscal quarter, to June.”

Apple has already suffered four induced profit slides in the past decade

The first three were largely related to the iPhone’s product cycles and its functionality, price points and demand in China (the early stages of the pandemic contributed to the last one), according to Mould.

“The subsequent share price surge may mean that January 2020’s crunching profit warning is but a distant memory, but it does not mean it cannot happen again in the latest set of product features fail to capture consumers’ imaginations,” Mould said

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