Apple sheeple will surely stand in line for the new iPhone 15 smartphone. But S&P 500 investors aren't impressed at all.
Shares of Apple dropped 7.2% in the week leading up to the unveiling of the company's latest handset. That's the largest decline ever in the week ahead of an iPhone launch. It's even worse than the prior week's 6.7% drop ahead of the 2011 announcement of the much-maligned iPhone 4s.
And don't blame the S&P 500 tech sector. The Technology Select SPDR ETF is down just 0.4% in the past week, slightly better than the S&P 500's 0.7% fall in that time. And both are much better than Apple's performance.
"Headed into the reveal, the stock of Apple has had a rough go of it recently," said Bespoke Investment Group. "The past year's steady uptrend was disrupted back in late July when the stock fell 5% in reaction to earnings."
iPhone 15 Highlights Apple's Stagnation
Apple is the most important stock in the S&P 500. It carries a market value of $2.8 trillion — giving it a 7% weight in the index — more than any other.
But it's not acting like a standout growth stock — with the iPhone 15 as just the latest example. Analysts think the company's adjusted earnings per share will fall nearly 1% in the current fiscal year ended in September 2023. And revenue this fiscal year is expected to drop roughly 3% — a far cry from the kind of growth other S&P 500 companies are putting up.
Can The New iPhone Reinvigorate Apple's Growth?
Analysts remain confident Apple will regain its winning ways. And to some degree in today's smartphone duopoly, consumers don't have much choice.
That might be why analysts still think Apple stock will be worth 201.85 in 12 months. If that's right, it would mark a roughly 14% rise. Additionally, analysts think the company will earn $6.58 a share in fiscal 2024. That would be a return to growth of 8.5%.
And to be fair, given how mature the iPhone is, much of the gains come in the back end, when consumers' contracts expire and they must buy a new phone. Shares of Apple historically gained 3.1% in the three months following a new iPhone announcement. "Up until the phone actually hits store shelves (something that can range from a few days to a few weeks), performance is only marginally better," Bespoke said.
But investors will remember the glory days, which made Apple one of the top and favorite stocks in a generation. It's also Warren Buffett's largest holding.
"Previous announcements have coincided with plenty of highs, lows, and everything in between for the stock, but overall, AAPL has been a monster during the iPhone era," Bespoke said.
iPhone 15 Lands With A Thud
Worst stock performance ever in week ahead of announcement
| Model | Announced | Stock % change |
|---|---|---|
| iPhone | 1/9/2007 | 9.1% |
| iPhone 3G | 6/9/2008 | -2.4% |
| iPhone 3GS | 6/8/2009 | 3.2% |
| iPhone 4 | 6/7/2010 | -2.3% |
| iPhone 4S | 10/4/2011 | -6.7% |
| iPhone 5 | 9/12/2012 | -0.1% |
| iPhone 5S | 9/10/2013 | 1.2% |
| iPhone 6 | 9/9/2014 | -5.1% |
| iPhone 6S | 9/9/2015 | -1.9% |
| iPhone SE | 3/21/2016 | 3.3% |
| iPhone 7 | 9/7/2016 | 2.1% |
| iPhone X | 9/12/2017 | -0.8% |
| iPhone XS | 9/12/2018 | -2.6% |
| iPhone 11 | 9/10/2019 | 5.3% |
| iPhone 12 | 10/13/2020 | 7.0% |
| iPhone 13 | 9/14/2021 | -5.5% |
| iPhone 14 | 9/7/2022 | -0.8% |
| iPhone 15 | 9/12/2023 | -7.3% |
| Averages prior to iPhone 15 | 0.2% | |
| ETFs | ||
| Technology Select SPDR (XLK) | -0.6% | |
| S&P 500 (SPY) | -0.8% |
