How Product Releases Affect Apple's Stock Price

Apple Stock Overview

The stock market reflects all known information about companies, according to the efficient market hypothesis. It processes and assimilates new data rapidly through the mechanism of buying and selling.

The stock market is also forward-looking, which explains why a company's stock may fall, even when reported earnings improve from the previous quarter. The stock price history of Apple is an example of this.

The release of an innovative, revenue-driving product or service is one of the few ways a company can influence its stock's valuation. Apple's financial performance, including the ascendance of its share price, relies heavily on product sales. However its product releases initially haven't always pushed share price higher.

A star performer through much of its recent history, Apple's stock hit new all-time highs toward the end of 2021. It also had a market capitalization approaching a record $3 trillion.

This article breaks down Apple's product lines and how they have affected the company's stock performance and position in the global market.

Apple Stock Split

It's important to note some key points about Apple's stock history. The company's stock trades on the Nasdaq under the ticker symbol AAPL. As of Jan. 31, 2022, Apple had a market capitalization of nearly $3 trillion, closing the trading day at $174.78.

Apple's stock has split several times since it first went public in December 1980. The first split came on June 16, 1987, on a two-for-one basis at a pre-split price of $79.

The next split came on June 21, 2000, when share prices reached $101.25. On Feb. 28, 2005, Apple split its stock again when it hit $88.99. These last two were also two-for-one splits. The company split its stock again on a seven-to-one basis on June 9, 2014, when share prices reached $645.57.

The final stock split came on Aug. 31, 2020, when it split on a four-to-one basis at a pre-split price of $499.23.

In general, the accepted purpose for a stock split is that it could result in, for example, Apple stock being a more accessible and attractive purchase for individual investors who may not have as much to spend as other investors. A sixth Apple stock split could motivate individual investors and traders to put more money into Apple stock.

Is another Apple Stock Split in the offing? With the stock price not that far from its high points, another Apple stock split could again return the stock price to a level that spurs fresh buying.

Even though stock splits add no new capital to a company and create no change in value for current investors, they can sometimes result in positive, short-term upward price action.

There's no way to know if this would happen in the event of another Apple stock split. However, an Apple stock split itself may indicate that the company's products and services, and its stock, have performed well enough to warrant the decision for a split by Apple.

Apple's Product Lines

Apple's five main product lines drive its sales.

• iPhone
• Mac products
• iPad
• Wearables, home, and accessories
• Services

The Cupertino-based company has a looming presence in each market. This can be attributed to the monopoly that the company seemingly has on innovation.

The iPhone is by far its most profitable product line, raking in $71.6 billion in sales in the third quarter of 2021. That represented more than half of overall revenue of $123.49 billion.

In Q3 2022, iPhone sales were $40.66 billion. Apple's services category was the second-highest-grossing segment with $19.6 billion for the quarter. The wearables, home, and accessories segment followed with $8 billion. Mac products and the iPad category rounded out the group with $7.3 billion and $7.2 billion in sales in Q3 2022. Thus, in the quarter alone, Apple's revenue totaled over $82 billion.

The company creates markets that didn't exist while revolutionizing ones that did. In this respect, the difference between Apple and other companies is clear. Apple spent $19.49 billion on research and development (R&D) in the nine months ending with Q3 2022. By comparison, other Fortune 500 companies focus more of their energy on advertising, cost-cutting, or overall efficiency.

Product Releases and Apple Stock

The iPod

Released on Oct. 23, 2001, the first iPod held up to 1,000 songs and had a battery life of 10 hours. It cost $399. The following day, the stock moved up slightly, from $18.14 to $18.95, and closed at $20.00 per share on Nov. 19, 2001.

Though its initial effect on stock price was muted, this first iPod led a chain of similar products that set the bar for Apple's competitors in the portable media player market.

For example, the 2003 release of the iTunes Store and a Windows-compatible version made the iPod a viable option for Windows users. By the end of 2004, Apple had sold over 10 million iPods.

The iPod's reign ended when more people began using their phones to play music. As a result, Apple phased out the iPod. The iPod Classic, Nano, and Shuffle are no longer produced, leaving just the iPod Touch in existence.

Currently, the iPod is such a small source of Apple's global revenue that the company includes it in its wearables category, which made up about 9% of sales (compared to around 50% for the iPhone) in Q3 2022.

The iMac and MacBook

Apple's Mac products are another example of wildly successful Apple products. The iMac was released in May 1998, a month in which Apple's stock price dipped to $26.69.

Though it didn't have an immediate impact on Apple stock, the stock rose to $43 a share in just three months.

The iMac went on to become the "No.1 selling machine through the retail and mail-order channels in the 1998 holiday season," according to The New York Times. Apple's stock traded at $138.69 two years after its release.

The iMac's popularity paved the way for products like the PowerBook G4 in 2001 and the MacBook Pro in 2006.

Despite their popularity, Apple's desktops and laptops hold a small global market share of personal computers. In fact, as of the fourth quarter of 2021, its market share in the personal computer space was 7.7%.

The iPhone

This is arguably the most revolutionary tech product ever created, changing the landscape of the mobile phone market.

The first iPhone was announced with much fanfare on Jan. 9, 2007. It promised users a mobile phone, an iPod with touch controls, and Internet capabilities, including email, surfing, and maps.

The company sold about 270,000 units within its first 1.25 days on the market in June 2007. However, the company's stock price only gained seven cents the same day the phone was released.

The price action may have been muted by early sales that missed Wall Street estimates. A month later, the stock's price saw a 15.9% increase.

Apple's iPhone 13 was released in September 2021. The iPhone 12 was released in October of 2020. As of the first quarter of 2022, the iPhone held 62% of global market share in smartphones costing over $400.

The iPad

Apple created the global tablet market when it announced in January 2010 the upcoming release of the iPad. Initial sales began in early April of the same year.

On the first day of trading following its sale, Apple's stock rose slightly more than 1%. Soon after, it rose more than 40%. Apple held a market share in the tablet arena of 38% as of Q4 2021.

Apple actually sold an earlier version of a tablet in 1993 known as the Newton MessagePad. A personal digital assistant, it was a shadow of the iPad, which contained all the functionality of the iPod Touch on a much larger screen with a faster processor.

Services

Apple provides users with services that are used with its devices. This category is designed to help users stay productive, entertained, and connected through tablets, smartphones, and personal computers.

The services segment constantly evolves to keep up with user demand. So, perhaps its overall sales rather than any particular release is most important to share pricing.

Apple services sales helped propel the price of Apple stock approximately 35% higher in 2021. For the period, the segment had more than 745 million paid subscribers, an increase of about 6.5% over 2020.

Apple also paid App Store developers more than $60 billion, an all-time high that demonstrates the importance of this segment to increasing revenue and stock price.

In addition to Apple Pay, Apple Books, the App Store, and Apple News, the company's services segment includes:

• Apple Arcade: Apple's video game subscription service provides users with interactive games and entertainment. There are free games with the option to upgrade through in-app purchases.
• Apple Music: Launched in 2015 as the company's music and video streaming service. It lists more than 70 million songs for purchase and download. The service also offers curated music lists, 25,000 radio episodes, and FaceTime interviews with stars. According to Apple, about 90% "of iOS 14 listeners have used these new features, and engagement with Apple Music’s industry-leading lyrics feature has doubled in 2020."
• Apple TV+: Launched in November 2019. Users can choose from a variety of movies and television, along with original content produced by Apple. The service is available on Apple products as well as video game consoles and smart TVs.
• Apple Podcasts: Available in more than 175 different countries on Apple devices.
• iCloud: Provides users with cloud storage services. You can store photos and videos along with notes and other files that can be updated and retrieved on a host of Apple devices.

This category also includes AppleCare. For a fee, customers get support for technical and software problems and hardware repairs and services for their Apple products.

Wearables, Home, and Accessories

This segment is comprised of a series of innovative products, including the Apple Watch, smart home products (security cameras, light fixtures, electrical outlets, thermostats, Wi-Fi routers, etc.), earbuds, charging cases, cases, speakers, and watch bands.

Sales for the segment were $8 billion in just the third quarter of 2022. This category's direct relationship with the services segment, illustrated by the Apple Fitness correlation with the Apple Watch, is likely to continue to be a major driver for Apple's growth.

The Apple Watch is by far one of the biggest attractions. The first version of the watch was launched in April 2015. Apple remained tight-lipped about how many were initially sold.

Analysts estimated that the company would sell over 3 million watches—roughly the same number of iPads it sold in the first three months when it was launched. It's estimated that the Apple Watch made up 75% of all smartwatch shipments within its first few months.

The Bottom Line

There have been few Apple product releases that immediately resulted in a meteoric rise in the company's stock price. Day traders are known to target Apple at the release of each of its products, but the quick riches that they seek are all too often a mirage that swiftly disappears.

On the other hand, each product has had a noticeably positive effect on the stock price over a longer period of time. This points to the importance of basing one's investment decisions on a long-term view of performance, and not on day-to-day volatility.

Over time, the market can identify true value. Consider the wisdom of buying and holding rather than speculative buying. By doing so, investors can allow innovative companies like Apple to provide them with solid returns.