Why Apple Inc. (AAPL) Stock Won’t Take Off When the iPhone 8 Hits
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Rumors have surfaced this week that the release date for Apple Inc.‘s (NASDAQ:AAPL) iPhone 8 might be pushed back a month, to October. That hasn’t affected AAPLstock much. But then again, neither will the new iPhone 8.
Source: Beni Krausz via Unsplash
There was a time when Apple’s new product releases were shrouded in secrecy, and the big reveal events featuring the late Steve Jobs provided a 10% to 15% boost for AAPL stock in the weeks that followed. That excitement has dissipated, along with the secrecy, both of which seemed to wane not long after Jobs’ death in October 2011.
That’s not to say that the iPhone 8 won’t have certain features that will excite hardcore fans of Apple products. For example, the new phone will reportedly come equipped with AAPL’s first-ever OLED screen in an effort to keep pace with Samsung’s Galaxy Note 8 phone. But I’m not sure there will be anything truly groundbreaking. In my mind, that’s almost beside the point anyway: by definition, iPhones no longer break new ground. This is, after all, the eighth version of the iconic phone.
The Thrill is Gone
Fact is, iPhones no longer excite investors. Though Apple stock has recovered quite nicely after a down year, it still trades just 11% higher than its May 2015 peak. For AAPL to truly rejoin the ranks of the market’s great growth stocks — a list that includes Facebook Inc (NASDAQ:FB), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL), which have popped an average of 86% in the last two years — Wall Street will need to see something new. Moves into self-driving cars and streaming video are apparently in the works, but those could be years down the road. In the meantime, the latest iPhone alone isn’t likely to compel investors to start snatching up AAPL stock en masse again.
After peaking at $156 a share in May, Apple stock languished in the $142-$146 range for the last month until poking its head above $150 on Monday. Perhaps that will be the start of a nice little rebound for the stock. But aside from the second-quarter earnings report on August 1, there’s no real obvious catalyst on the horizon until the iPhone 8 release — and even that’s likely to generate a rather ho-hum response from investors, as have the last few iPhone unveilings.
AAPL Needs Something New
Until Apple drops another true new product bombshell on us, AAPL stock will have to be content with small victories. If you already own the shares, that may be enough for you. But at a time when stocks are flourishing and the market is at all-time highs, there are better opportunities for high long-term returns out there — namely from the three tech blue chippers I mentioned earlier.
Apple stock remains a perfectly fine investment. If you still own AAPL or are considering buying shares, you’re not likely to lose money on it anytime soon — not with 7% earnings growth expected this year and an 18% EPS jump forecast for 2018. After a rough patch, the stock has stabilized.
But for AAPL stock to keep pace with the likes of Amazon, Google and Facebook in the coming years, it will need much more than an endless wave of sparkling new iPhones to attract investors.
As of this writing, Chris Fraley did not hold a position in any of the aforementioned securities.
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