Apple Stock Drops As Keynote Fails To Impress And Restore Confidence

  • iPhone 6s is a hop rather than a leap from iPhone 6
  • From an investor perspective, the worst iPhone launch ever
  • New Apple products unlikely to blow away competitors
Apple stock drops after unimpressive product launch

To be fair, the writing was already on the wall for Apple (NASDAQ:AAPL) and its investors. We have to rewind the clock to 2007 for the previous fall in Apple stock price in the 30 days leading up to an iPhone announcement. Samsung (OTC:SSNLF) - Apple’s main competitor in the smartphone space- launched a spectacular range which has been widely acclaimed in the industry. Therefore, the pressure was on for Apple to have buyers excited about getting the iPhone 6s. Arguably, it had to be as big as the launch of the first iPhone.

Unfortunately for Apple, their investors, and customers, this simply wasn't the case. The much talked about 'Apple's September 9th event' failed to impress. Sure, force touch came to the iPhone, faster processors, and an HD camera, but there was really nothing to get excited about. 74% of Apple’s gross profit comes from the iPhone. And with Apple heavily reliant on the contract phone market, they really needed to give people something they would be willing to lock themselves into another contract for. A 12mp camera has been on competing smartphones for years. Secondly, the last two iPhones had Touch ID. And finally, ‘3D Touch’, although interesting- and undoubtedly developers will find innovative ways to utilize it- isn’t going to trigger the sales numbers Apple needs right now. Could Apple be falling behind?

Interestingly, they chose not to change the design. Concerning the heightened competition, this was a move that will hurt sales. You see, for some Apple buyers, buying the latest iPhone is a show of status. And with no visual indicator to distinguish an iPhone 6 from an iPhone 6s, this portion of Apple’s buyers may choose to hold on. This could mean lower sales. This iPhone 6s announcement is similar to that of iPhone 4s. However, back then Apple had smartphones with exceptional build quality. Today, the rest of the pack has caught up as competition has heated up. This was the wrong time to give the people a small improvement in product. The market seems to agree because as the keynote progressed Apple stock fell like a rock bouncing down a cliff. Apple stock had a high of 113.81 on September 9th and stood at 110.38 by evening time (EDT).

The iPhone wasn’t the only product launched, we were also shown the iPad Pro, iPad mini 4, and the Apple tv.

The iPad Pro measures 12.9 inches diagonally, compared to the iPad Air 2s at 9.7 inches, and comes with an improved processor, camera, screen, among other features. The issue is that Apple is aiming it squarely at creatives and business people. This is emphasized by the introduction of Apple pencil… an optional $99 stylus made just for iPad Pro. Oh, and there is also a Smartcase, which is supposed to make the device more conducive to productivity. Basically, they took an iPad Air 2, stretched it out, gave it beefier specs, a stylus, and case. All things we have seen before. Interestingly, an analysis of social media conversations surrounding this announcement shows that it has given Microsoft’s (NASDAQ:MSFT) Surface Pro 3 more validity. People use iPad’s because they are dependable. They use Macs to get stuff done. The iPad Pro is a sort of Frankenstein-like forced bonding of these two worlds. And much like Frankenstein, no one asked for it. Plus at a starting price of $799, a mere $100 cheaper than an 11 inch Macbook air, it isn’t  a straightforward buying decision. Releasing products that makes people reach for their wallets was something Apple previously excelled at.

Note: You might be interested in Apple Stock Analysis video evaluating the company fundamentals.

Finally, Apple also launched the Apple Tv. Investors were hoping to see something extra, something unexpected, something magical. Nope. It ties Apple’s ecosystem together and provides a new remote. Apple is entering a market filled with well-established players. For instance Google’s (NASDAQ:GOOGL) chromecast can be bought for $35. When Apple’s goes on sale it will start at $149. It looks great and will move because it is by Apple. However, they had the opportunity to stake their flag firmly and leave Amazon, Roku, and Google eating dust. However, they gave us the predictable, and with competition heating up fast, that might not be good enough.

In conclusion, it used to be standard protocol to buy Apple stock in the weeks leading up to an iPhone announcement and then sell it after the announcement. Anyone who tried it this year will have been sorely disappointed. When Apple needed to deliver the goods, they gave us boring, predictable, there I say, an ‘un-Apple-like’ keynote. This doesn’t bode well for long term growth. The competition is fiercer than ever, and Apple needs to come out with an outstanding range next time or lose market share to Samsung and other tech companies.

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