Apple iPhone 6 coming? Watch out below!

When Apple launches a product, a few things typically happen. Apple fans dust off their tents to get ready for those long queues, and the rumour mill goes into overdrive over possible features ranging from solar charging to built-in laser pointers.

Apple logo
Source: Bloomberg

Sometimes the media gets lucky enough to find prototypes at random pubs. That should be all good for Apple’s stock price right? Yes and no.

The hype ahead of Apple’s new product event typically gives a boost to its stock price.

That’s been the case so far in the lead up to the speculated launch of iPhone 6, on September 9, 2014.

In mid-August, we saw Apple shares break above the $100 level for the first time, since its stock split in June, on the back of a rise of over 8% since July.

Watch out below

Apple’s stock price has often dipped on the day it officially reveals the product, in a classic play of buy-on-the-rumour, sell-on-the-fact. The possible reasons range from the product falling short of elevated expectations, or just simple profit-taking on the rally.

Looking back at iPhone 5S and 5C’s announcement last year on September 10, Apple’s stock price rose nearly 11% in the prior 30 days to the launch. It took just the next five days for it to lose all those gains. On the product announcement day, Apple’s stock price slid 2.28%, with volumes more than doubling the weekly average as investors rushed for the exits.

Apple.Inc Chart
Click to enlarge - Figure 1 Apple's stock price loses gains within a week after iPhone 5C announcement

Investors behaved in a similar fashion during the launch of iPhone 4 in 2010, which was revealed on June 7 and hit the streets on June 24.

Apple.Inc All Sessions
Click to enlarge - Figure 2 Apple's iPhone 4 announcement sees profit taking

Is there a correlation to Apple’s product launches and its stock price? History would suggest a very strong case, judging from previous shareholder reactions.


Stock price % change on announcement

Longest slide within a week

iPhone 5S, 5C

-2.28% (Sept 10, 2013)


iPhone 5

+1.39% (Sept 12, 2012)

NA (-2.98% a month later)

iPhone 4S -0.56% (Oct 4,2011) -1.28%
iPhone 4 -1.96% (Jun 7, 2010) -4.99%
iPhone 3GS -0.57% (Jun 8, 2009) -5.93%
iPhone 3G -2.17% (Jun 9, 2008) -7.15%
iPhone +8.3% (Jan 9, 2007) NA (-2.57% a month later)


Some launches after having lofty anticipations priced in have prompted a pullback of over 5% within a week. Though it should be noted there can be upside surprises on occasions, where the bears come in a bit later - as seen in the iPhone 5 debut and some other Apple products. Another variable to watch is the overall market sentiment.

What investors can take away from this is better awareness when planning their entries or exits. Longer-term investors could see this as an opportunity to wait for better value on the dips during an uptrend, while traders could position themselves to short in the interim.

A sell-on-the-fact stock play is not limited to Apple. Typically any product event that sees a similar level of secrecy and hype ahead of its official announcement can be a good candidate.

We saw this in June with Amazon, when it introduced a music service and a smartphone, both of which were leaked in the news days beforehand. Its share price fell 2.7% after it officially launched its music service, while the official smartphone announcement pulled stocks down 2.2%.

Amazon chart
Click to enlarge - Figure 3 Amazon announced a music service and phone in June 2014

So could we expect to see history repeat itself for Apple’s stock price ahead of what’s likely to be an iPhone 6 launch.

Well, the first half of the story has started to pan out. Now, the more hype we get to elevate investor expectations, the more likely the stage will be set for the same ending.

Apple stocks chart
Click to enlarge - Figure 4 Apple stocks are on a rally ahead of event in September

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