Apple launch: Why are the company's shares down?

  • Hindustan Times, New Delhi
  • Updated: Sep 10, 2015 16:29 IST
Venue of Apple's unveiling event at the Bill Graham Civic Auditorium in San Francisco on Wednesday. (AP Photo)

Apple's shares were trading down 1.3% at $110.86 soon after Apple launched a clutch of new products including the new iPhones, iPad Pro and the new Apple TV.

Shareholders were expecting the event to act as a positive trigger for the stock prices that fell as low as $92 dollars due to the stock market tumbles in China, which is Apple's biggest market accounting for more than quarter of its sales. Shares have fallen almost 6% in the month ahead of the event. This is an anomaly to the past launches, when the shares have climed in the same period. This time China's slowdown may have overweighed on the bullish sentiments.

But if you were wondering, how come stock prices took a tumble soon after the launch, you would have to delve into a bit of history. Over the past years Apple's shares have fallen after almost every launch event only to recover afterwards. This trend was bucked only when the iPhone 5 was launched in 2011. But mind you that phone was a huge upgrade over the iPhone 4S and a far better iPad was launched too.

Also, Apple’s launches also show another trend: shareholders are not happy with the upgrades. Shares have fallen everytime Apple has launched an upgraded version of their smartphones (see chart). As Reuters noted the launch “replicated the recent history of such rollouts but also reflected the lack of any transformative products that could jumpstart the company's sales ahead of the crucial holiday season”. So, has the market given a thumbs-down to Apple.

This would only be right for the day of the launch as the company’s consumer appeal will still help it rake in sales and push up its share prices. And this is what has happened in almost all of the past launches. Moreover, this time Apple has got its new TV – being called “buried lead” of the event – to help it out.

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