Apple finally unveiled its new line of iPhones last week but the public response hasn’t been as enthusiastic compared to its previous smartphone launches, which could have a negative impact on the company’s stocks, according to a report by data firm that analyzes market trends and social media sentiment.
Declining Interest in iPhones
According to Andy Swan, the founder of LikeFolio, a firm that gathers data from different markets and tracks social media behavior, the number of people who are interested in buying new smartphones is on a steady decline.
Last Wednesday, Apple revealed its new line of iPhones including XS and XS Max – the biggest and the most expensive smartphone yet – as well as a budget model, iPhone XR. The company also launched the fourth addition of its Apple smartwatch, called the Series 4, which has advanced health and fitness features.
Following the highly anticipated conference, LikeFolio revealed that demand for Apple products has fallen to lowest levels since 2015. Swan says that this isn’t good news for the company or its stock value. Year-on-year product sales have fallen for the first time in 13 years, despite such a major Keynote event.
Effect on Stock Value
Data from LikeFolio shows that consumer interest after Apple’s annual keynote event is a reliable indicator of how the company’s stocks will perform over the subsequent year. In 2017, when Apple first unveiled its popular iPhone X and iPhone 8 series, stock prices increased as the number of people on social media with the intention to purchase the devices soared.
Similarly, when Apple first unveiled its iPhone 6 and iPad Pro in 2015, the consumer purchase interest was much lower than the company had anticipated. In the year following the keynote event, stocks dropped 9.5 per cent whereas the S&P 500 gained 9 per cent. Despite launching four new products at the event, the level of purchase intent, as observed through social media posts, was much lower than it has been in the prior couple of years ago.
Luckily for Apple, its keynote event this year was saved by the Series 4 Apple Watch, which sold in much larger numbers than the exorbitant iPhones. The revolutionary watches boasted a thinner body, rounded edges and an FDA-approved EKG monitor that monitors heart health. The new features in Apple’s wearable gadget have put Fitbit’s future in serious danger. It wasn’t surprising when Fitbit’s stock plummeted 7 per cent last Wednesday after Apple’s two hour event.
On the other hand, Apple’s shares have been on an uptrend since the beginning of 2018. The company has gained over 7 per cent in the last month alone, tallying its total increase so far this year at 33 per cent. Despite the increase in prices, Apple shares are considerably cheaper at $218.24 considering its current performance and future growth outlook.
On Thursday, 24 hours after the annual hardware update, Apple’s share prices stood at $226.41, almost 2.6 per cent higher than they are today. Shares closed over 17 times greater the 2019 earnings forecast and 15 times higher than expected earnings in 2020.
The iPhone maker’s current stock market performance is much weaker than other tech titans on the FAANG stocks such as Facebook, Netflix and Amazon. Amazon is currently trading 78 times higher than analysts’ forecasts for 2019 returns whereas Netflix stock prices are 84 times higher than expected.
Trade Conflict with China
The current trade conflict between the U.S. and China could be another big factor behind Apple’s weak performance on the stock market. Although the company dodged the increased tariffs on is AirPods and smartwatches, its new line of iPhones and MacBook laptops are in danger of getting targeted by China since the country produces and assembles most of Apple’s gadgets.
Apple’s current dependence on China for production puts it is a vulnerable position as the global economic feud escalates to new levels. Apple warned earlier this week that it may have to increase prices if Trump administration strikes the tech industry with import tariffs.
Moreover, the timing of the current trade feud could work against Apple’s interest, especially since it starts shipping its new iPhones this week. These sales will make up majority of the company’s revenue over the next three months, before Christmas shopping, which generally accounts for one-third of Apple’s revenue.