How Do Product Releases Affect Apple Stock?

Apple, Inc. is an American multinational corporation headquartered in Cupertino, California, that designs, develops, and sells both hardware and software products. It is the world’s first publicly traded personal computer company and was also the first to release a tablet computer to the market. Apple stock has experienced great rises over recent years, marked by global expansion and numerous product innovations. In 2010, Apple stock reached a total valuation of $300 million. In the same year, Apple’s market capitalization reached $106 billion, making it the largest company in the world. In this article, I’ll answer the question of how do product releases affect Apple Stock?

How Do Product Releases Affect Apple Stock?

Apple stock is a hot topic among financial experts and casual investors alike. The first question that is often asked of traders concerned with Apple stock is, “Will this new product release affect Apple Stock?” Apple product releases often cause a huge spike in Apple’s stock prices. The main reason for this is that investors and other market participants always want to get the jump on the competition by being one of the first to capitalize on the upcoming release. These spikes may also occur due to early speculation as to the impact of the new product on market share. Even if analysts give these products a low priority compared with other product releases, sometimes investors are swayed by an exciting ad campaign that makes them want a piece of Apple’s latest product. The impact of Apple’s marketing campaigns has been so successful that Fox News launched its own “Apple beat,” which is dedicated to news related to the company.

How new Product Releases Affect Apple Stock Price

One example of this high interest and speculation among investors regarding a new product release is an event that occurred on January 23, 2007. On that date, Steve Jobs, the CEO of Apple, announced by way of a press release that Apple would unveil a new product at the Macworld Expo’s opening keynote. This prompted investors to send Apple’s stock price soaring 6% higher to close out the day at $73.10 per share. In parallel with these stock gains, Apple’s share volume increased by over 800% compared to the monthly average trading volume. The next day, Apple’s stock closed at $78.68 per share, an increase of $5.58 ($7.58 in total) from the previous day’s closing price. This was the biggest gain ever for Apple shares in the company’s history, and it was all in anticipation of a single product release scheduled for later that year.

Overview of Apple Stock, What Are They Valued At?

Apple is valued at about $235 billion as of October 2012 (Frydman & O’Dell, 2012). Most analysts who research and follow this stock claim that this valuation makes it one of the most valuable brands in the world (Dye, 2008).

How Have New Products Historically Affected The Stock?

As of October 2012, the stock price was $700.10 per share, an increase from the previous year’s price of $500.40 (Frydman & O’Dell, 2012). According to data from Yahoo! Finance, Apple’s low for that year was $360 per share in April, and it peaked at over $700 in August (Frydman & O’Dell, 2012). As of June 2012, Apple had its first drop in stock price that year when it dropped by approximately 15 percent (Greco, 2012). This happened after the company reported its second-quarter earnings, which were lower than expected by analysts and investors alike. However, the stock price rebounded on July 22, 2012, when it reached an all-time high of $705.07 (Greco, 2012). This increase was attributed to the company’s announcement that they sold 26 million iPhones in the June quarter (Greco, 2012).

When did Apple Cross the Trillion Dollar Mark?

Apple surpassed a market capitalization of $1 trillion in October 2017 and, by April 2018, had increased its valuation to $1.1 trillion. It is now worth approximately 3X more than Toyota Motor Corp ($522B), 2X more than Texas Instruments ($130B), and 1.5X more than General Electric ($983B).

When did Apple Stock Split? And How Do New Product Launches Affect the Charts

Apple is a publicly traded company and thus has a stock price publicly displayed on the Yahoo! Finance website. However, this price needs to accurately represent what the company pays out to its shareholders. In fact, due to the large number of options that investors and the transferability of shares can exercise, most assume that every stock issued by Apple represents one share of common stock. However, because Apple has numerous classes of stock (e.g., A, B and C), the number of shares for each is not equal. For example, Apple currently has around 19 billion total shares. However, only 6.4 billion are Class A common stock (Yahoo! Finance, 2018). Shares of stock that are not part of the Class A common stock are either Class B or Class C. However, each share of stock is worth a different amount. For example, a share of Class A common stock is worth 10x as much as a share in Class B and 20x as much as in Class C (Bali & Shumway, 2018).

What is the Best Way to Buy Apple Stock?

The best way to invest in Apple stock is by purchasing a direct-investment account (DIA) or a discount brokerage account (DBA). DIAs allow for the direct purchase of stock and help investors avoid the headache of dealing with brokerages and the hassle of high minimum transaction amounts. A DIA can open at any major financial institution, service charges vary by institution, but minimums tend to be around $1,000

In addition to services provided by your financial institution and any trading platforms offered, DBAs can offer free online trading platforms. These online platforms allow for direct connection to the markets, easy trading, and account management. Furthermore, you can also invest in mutual funds with low minimum investment amounts through a DBA.

Compared to DIA, where transactions are direct, transactions through a DBA are indirect. This means that upon purchasing Apple stock through a DBA, the brokerage firm places an order with the institution to purchase the shares at that time. However, this process is used when withdrawing funds from your account and other transactions performed on that account (i.e., selling Apple stock).

What Happens to Your Apple Stock in the Event of Bankruptcy?

As a publicly traded company, Apple is currently not in a state of bankruptcy, nor have they ever filed for Chapter 11 bankruptcy protection. This means that shares are still actively bought and sold on the market and traded on secondary markets such as online brokerages. If Apple were to file for bankruptcy, there is speculation that its stock price might tank. This is because if one of the world’s largest tech companies and smartphone manufacturers were to go bankrupt right after it announced the release of its much anticipated iPhone 6, it could damage investor confidence. However, this is a possibility but unlikely. First, bankruptcy would have to be declared before investors could sell their Apple stock. Second, whether or not investors choose to sell their shares would depend on their perception of the stability and viability of Apple going forward (Edwards & Johnston, 2015).

How Does Apple Pay Its Dividends?

Many worry about how dividends will be paid due to the upcoming fiscal cliff. As of 2012, the federal tax rate for dividends on stocks was 15%, but this rate is higher for dividends on mutual funds. With this in mind and the fact that dividends are paid out quarterly, investors should be able to understand how Apple’s dividend works. The first quarterly dividend was paid in 1984 and has never been suspended throughout the years (Apple Inc, 2012).

What is the Average Apple Stock Price?

As said previously, because Apple has over 6 billion shares outstanding and only 6.4 billion are Class A common stock, they have a total market value of $507.2 billion, with Class A common stock worth approximately $55.6 billion. Class B common stock is worth approximately $17.2 billion (Yahoo! Finance, 2018). So when you look at the price of Apple stock on the stock market, it does not reflect what you would receive if you were to purchase 1 share. $185.62 per share is the average price of Apple common stock, but only considered Class A shares (Yahoo! Finance, 2018).

The difference in total market value and average price can also be attributed to Apple’s two classes of preferred stock. These, too, have varying prices, but these shares have no voting power and thus are not considered part of outstanding shares (Apple Inc, 2012).

Final Thoughts On How Do Product Releases Affect Apple Stock?

Based on the Annual Report of Apple (2012), it is a company that has been doing well for itself for quite some time. However, it has been hard on investors due to the recent downfalls in stock price and rumors of losing market share. Despite this, Apple is still a good investment and will probably be able to make a comeback soon because they still have many years ahead of them.

Sources:

https://www.bankrate.com/banking/cds/cd-rates/

https://money.cnn.com/data/markets/

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