As the crisp autumn air descends on Cupertino, California, tech enthusiasts and investors worldwide are excited.
Apple Inc. (AAPL, Financial) is gearing up to unveil its iPhone 15 lineup in its iconic September keynote event today. But this is not just any iPhone launch – we might be on the cusp of witnessing the most significant design transformation in 11 years.
While Apple's annual iPhone events have become somewhat predictable, showcasing incremental upgrades, this year promises a break from tradition.
A temporary surge or another "sell-the-news" saga?
The iPhone 15 event might temporarily boost Apple's stock prices due to the usual excitement and anticipation accompanying new product launches. However, the larger issues the company faces, such as the macroeconomic climate, declining sales over three quarters and competition from rivals like the Huawei Mate 60, might hinder a full recovery of its lost stock market valuation.
Historically, the unveiling of a new iPhone has been viewed as a "sell-the-news" event, according to Morgan Stanley analyst Erik Woodring. Over recent years, these introductions have not resulted in substantial gains for the stock. Apple's share price has experienced a decline, dropping by $177 in the lead-up to the iPhone 15 debut.
The muted response to new iPhone announcements may also be attributed to the nature of the upgrades. Many of the improvements to the iPhone have become incremental over the years, and much of the information about new features tends to leak before the official unveiling.
Next-gen tech meets premium pricing — Worth the hype?
As a result, the element of surprise, which could drive investor enthusiasm, is somewhat diminished. Monness Crespi Hardt analyst Brian White emphasizes this point, noting that no game-changing features are anticipated for the iPhone 15. Instead, Apple seems to be focusing on "incremental improvements."
Despite the concerns of incrementalism, the iPhone 15 is set to feature significant technical upgrades. The Pro models will boast the A17 processor, designed at a 3-nanometer scale, which promises enhanced speed and efficiency.
Further, design advancements such as a titanium frame, longer battery life and an improved camera system with a periscope lens for enhanced optical zoom are expected. Apple is also predicted to transition to a USB-C charging cable, offering faster charging and data transfer.
Reports suggest the base models of the iPhone 15 will maintain pricing similar to their iPhone 14 predecessors. However, the Pro models may see price increases. These increases could amount to $100, pushing the starting prices for the Pro and Pro Max models to $1,099 and $1,199, respectively.
There are even speculations of the Pro Max model being priced $150 to $200 higher than its predecessor. Given the popularity of the iPhone 14 Pro models over the standard device, Apple might be betting on consumers' willingness to pay a premium for the advanced features.
However, experts raised concerns about the broader economic landscape, speculating the heightened prices may not sit well with consumers, affecting shipment volumes.
Geopolitics, rivalries and the quest for market dominance
One recent challenge for Apple is China's move to prohibit central government officials from using iPhones, citing national security concerns. Such geopolitical issues can often overshadow product launches in their influence on stock prices. The impact of the government reportedly banning its workers from using iPhones is seen as being exaggerated.
This issue is not believed to be the primary cause of the stock price drop, but is a factor nonetheless. Given this ban affects only about 500,000 government employees' phones, its overall impact on Apple's sales and stock valuation might be limited.
Nevertheless, CEO Tim Cook has maintained a somewhat "independent" stance from the U.S. in Beijing's view. This diplomatic balance can be crucial given the political and trade tensions that often arise between China and the U.S.
Apple's stock prices coincided with the release of a major rival phone, the Huawei Mate 60, and competition from strong players in key markets like China can significantly influence investor sentiment.
The global smartphone market has declined, with total phone shipments dropping significantly. Although Apple's shipments have been relatively stable, the broader market trend cannot be ignored. Apple might be looking to increase its average price per phone to augment its revenue.
Whether this strategy raises prices universally or on premium versions will be pivotal. This approach, combined with the current market dynamics, could influence Apple's foothold in China.
Finally, the global economic scenario and three consecutive quarters of declining sales are highlighted as the primary reasons for the drop in stock prices. These underlying issues might persist in the short term, making it challenging for a single event, like the iPhone 15 launch, to recover the lost valuation fully.
While the iPhone 15 brings several technological enhancements to the table, the broader context, from geopolitical challenges to economic concerns, means it remains uncertain whether this new release will substantially impact Apple's stock price immediately after its launch.
Savvy investors might view the dip in Apple's stock price as a buying opportunity despite the challenges. The company's strong fundamentals, market dominance, adaptability and significant capital and expertise remain unchanged.