Apple's new iPhone gets the worst reception since the iPhone 6S

Apple is the most important stock in the S&P 500 — and the iPhone is the company’s key product. So it’s reasonable to investors to pay attention to a new version—they’re just not impressed anymore.




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The market reception of of Apple (AAPL) the new iPhone 14 due today is already lukewarm. Wall Street seems bored with repeated changes. Apple shares fell 6.3% in the month leading up to the Sept. 7 announcement, according to an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. It’s the stock’s worst performance heading into a new announcement since the stock fell 8% in the month before the September 2015 launch of the much-maligned iPhone 6s.

“Apple is expected to release a new version of the iPhone (on September 7) and while these events typically excite consumers and tech commentators, investors tend to have a more muted reaction,” Bespoke Investment Research said.

The S&P 500’s reliance on Apple

It may seem odd for S&P 500 investors to watch the performance of the latest iPhones. But given Apple’s huge weight in the index, it makes perfect sense. Apple’s market value is now $2.5 trillion. It is also Warren Buffett’s largest holding in dollar terms, far.

Apple has been the biggest and most important stock in the S&P 500 every year since 2019, said Howard Silverblatt, strategist at S&P Dow Jones Indices. Apple alone accounts for more than 7.2% of the S&P 500. No other company in history has had a larger share of the S&P 500 than Apple in 2021 and 2020 at more than 6.8%. Even in its heyday in the 1980s, IBM (IBM) represents just 6.4% of the S&P 500.

Microsoft (MSFT) is a distant number 2 in the index now at 5.8%. And it’s those two companies, Apple and Microsoft, that explain a lot of why the information technology sector has accounted for 27.3% of the S&P 500 this year, more than any of the 11 S&P 500 sectors.

So the iPhone matters to the S&P 500.

S&P 500 investors read on iPhone 14

Consumers expect the new iPhone to be a bit of a change, and that’s certainly the view of investors as well.

Even if you go back three months, you’ll see that Apple stock is up just 10.2% in that time. That’s below the average increase of 15.9% over that time period for all iPhone models going back to the original. However, it’s important to note that the S&P 500 is also down nearly 3% during that time. Similarly, in the previous six months leading up to tomorrow’s announcement, Apple shares are up just 6.6%. That’s a fraction of the typical 22% growth in the six months before the iPhone was announced. That’s even less than the 7.3% gain during that time for the Technology Select SPDR (XLK).

In many ways, the magic of iPhone messaging is long gone, though the profitability is still there.

In search of the future of the iPhone

“While a new product can be exciting for consumers and anyone who is part of the Apple fandom, investors tend to be cold-hearted to these events,” Bespoke said. “On average, during the 18 days that a new iteration of the smartphone was announced, AAPL stock rose just 22% of the time, with an average decline of 0.32%. In fact, AAPL has not reacted positively to the announcement of the iPhone since the iPhone 11 in 2019.”

Fans are hoping that bigger profits will come once the new iPhone hits stores. But investors should note that most stock action doesn’t coincide with the iPhone launch. Shares fell an average of 0.2% on the day of the announcement and rose just 3.8% over the next three months.

“AAPL’s performance is generally positive in the few months after the new iPhone drops,” says Bespoke. “However, average and median earnings have been short of the norm for all periods since early 2007; . . . the iPhone era for the company.”

New iPhone? Investors in the S&P 500 don’t care

Investor reactions to the new iPhones

Model Announced Availability % ch. week before ann. A month ahead. availability % ch. Availability % ch. 3 months ago 6 months ago availability % ch.
iPhone 01/09/2007 9.1% 4.9% 26.4% 77.2%
iPhone 3G 06/09/2008 -2.4% -1.0% 42.6% -4.8%
iPhone 3GS 06/08/2009 3.2% 11.3% 62.3% 46.5%
iPhone 4 06/07/2010 -2.3% 6.4% 12.5% 26.9%
iPhone 4S 4/10/2011 -6.7% -0.4% 5.9% 10.2%
iPhone 5 12.09.2012 -0.1% 6.3% 17.2% 14.4%
iPhone 5S 10.09.2013 1.2% 8.8% 14.4% 14.4%
iPhone 6 09/09/2014 -5.1% 3.4% 4.4% 29.3%
iPhone 6S 09/09/2015 -1.9% -8.0% -14.3% -10.9%
iPhone SE 21.03.2016 3.3% 10.3% -1.2% -7.4%
iPhone 7 07/09/2016 2.1% 0.0% 8.7% 6.0%
iPhone X 12/09/2017 -0.8% 2.1% 10.8% 14.3%
iPhone XS 12/09/2018 -2.6% 5.8% 15.9% 24.2%
iPhone 11 10.09.2019 5.3% 7.8% 11.6% 17.9%
iPhone 12 13/10/2020 7.0% 8.1% 23.9% 69.0%
iPhone 13 14/09/2021 -5.5% -0.7% 13.8% 22.9%
iPhone 14 07/09/2022 -1.7% -6.3% 10.2% 6.6%
Averages before iPhone 14 0.3% 4.1% 15.9% 21.9%
ETFs
Technology Select SPDR (XLK) 07/09/2022 14.3% 6.0% 13.4% 7.3%
S&P 500 (SPY) 07/09/2022 -1.0% -5.3% -2.6% -6.9%
Sources: IBD, S&P Global Market Intelligence

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