Investors have bought on the Apple rumours – will they now sell on the facts?

“Investors looking for a windfall from shares in Apple or the companies who supply it (such as Laird, IQE and Renishaw) may need to be patient, as the new iPhone X looks evolutionary rather revolutionary, the product is not available until November and in many cases the shares have already done very well," says AJ Bell Investment Director Russ Mould.

“Key developments in the iPhone X include a new organic light-emitting diode (OLED) screen, facial recognition, the scrapping of the home button, an enhanced camera and wireless charging – but all of these had been leaked in advance and none really represent a major step ahead of the competition.

“In addition, given the amount of preparation involved, it seems odd that Apple can’t actually make the product available until 3 November, even if British gadget fans can pre-order the £999-plus device from 27 October.

“As a result, there has to be a chance that Apple’s shares pause for breath, especially after their stunning run from $108 a year ago to $161, just shy of the $164 all-time high racked up last week.

“This would fit with both the old stock market saying about “buying on the rumour and selling on the fact” and the trading history of Apple’s shares, which have tended to soar ahead of a product launch (as speculation gathers about what will be involved) and then run into profit-taking afterwards.

      Apple share price performance
      Before launch  After launch
Announced Product Launched 6 months 3 months 3 months 6 months 12 months
09-Jan-07 iPhone 1 29-Jun-07 43.80% 30.20% 25.80% 63.70% 39.40%
09-Jun-08 iPhone 3G 11-Jul-08 -0.10% -5.90% -43.90% -47.50% -19.70%
07-Jun-10 iPhone 4 24-Jun-10 28.70% 17.30% 8.70% 20.30% 21.30%
12-Sep-12 iPhone 5 21-Sep-12 16.20% 69.90% -25.80% -35.30% -33.20%
09-Sep-14 iPhone 6 19-Sep-14 29.10% 6.70% 14.10% 8.10% 15.80%
07-Sep-16 iPhone 7 16-Sep-16 8.40% 17.80% 0.50% -7.80% 48.80%
12-Sep-17 iPhone 8 03-Nov-17 15.60% 10.60%      
  AVERAGE   20.30% 20.90% -3.50% 0.20% 12.10%

Source: Apple, Thomson Reuters Datastream

“Following Softbank’s takeover of ARM last year, UK investors are left with relatively few options if they want to access the Apple phenomenon via its chain of suppliers, especially as the silicon chip intellectual property designer is now locked in litigation with the Californian giant.

“Options to consider include IQE, whose shares have rocketed this year amid speculation that its semiconductor wafers, which are made of gallium arsenide and gallium nitride rather than the more traditional silicon, will be a key enabler of the new iPhone’s 3D-tracking technology.

IQE

Source: Thomson Reuters Datastream

“Laird, a specialist in electromagnetics and connectivity, is a further name to watch, although last autumn’s crunching profit warning may deter some.

Laird

Source: Thomson Reuters Datastream

“Another name to note therefore is Gloucestershire-based precision instruments supplier Renishaw, whose tools are used by manufacturers of vital components used by Apple.

Renishaw

Source: Thomson Reuters Datastream

“Again, however, it will be interesting to see if these names fall prey to profit taking now the details of the iPhone X are known and surprises look to be relatively few and far between.”

These articles are for information purposes only and are not a personal recommendation or advice.