Will the iPhone 11 launch give Apple’s shares a lift?

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Shares in Apple have surged by more than 40% from the low reached after the profit warning of 3 January but they have yet to recapture the all-time high reached last September, when the firm’s market valuation briefly exceeded $1 trillion. The major reason for this is poor earnings momentum and investors will be looking forward to the iPhone 11 launch on 10 September every bit as keenly as gadget fans, in the hope that it can spur profits and the share price alike.

Apple’s shares have not done badly since the launch of iPhone X in September 2017, advancing by just over a fifth, but the incremental improvements offered by the XS, XSMax and XR – at higher price points – did nothing for profit growth or the share price.

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%)
08-Jun-09 iPhone 3GS 19-Jun-09 55.00% 37.30% 32.60% 40.10% 96.50%
07-Jun-10 iPhone 4 24-Jun-10 28.70% 17.30% 8.70% 20.30% 21.30%
04-Oct-11 iPhone 4S 14-Oct-11 23.70% 18.10% (0.50%) 43.40% 49.20%
12-Sep-12 iPhone 5 21-Sep-12 16.20% 69.90% (25.80%) (35.30%) (33.20%)
17-Sep-13 iPhone 5GS 20-Sep-13 3.40% 12.10% 17.50% 13.10% 51.20%
09-Sep-14 iPhone 6 19-Sep-14 29.10% 6.70% 14.10% 8.10% 15.80%
09-Sep-15 iPhone 6S 25-Sep-15 (7.00%) (10.00%) (5.80%) (7.90%) (1.70%)
07-Sep-16 iPhone 7 16-Sep-16 8.40% 17.80% 0.50% (7.80%) 48.80%
12-Sep-17 iPhone 8 22-Sep-17 15.60% 10.60% 15.20% 11.20% 43.30%
12-Sep-17 iPhone 8-plus 22-Sep-17 15.60% 10.60% 15.20% 11.20% 43.30%
12-Sep-17 iPhone X 03-Nov-17 17.30% 10.90% (7.00%) 2.50% 20.30%
13-Sep-18 iPhone XS, XSMax, XR 26-Oct-18 25.80% 18.70% (24.50%) (9.80%) (7.80%)
AVERAGE 19.70% 17.40% 1.60% 7.50% 28.80%

Source: Refinitiv data

After a 10% year-on-year drop in EPS in the second quarter of the fiscal year to September and a 7% drop in the third, guidance given by chief executive Tim Cook still leaves analysts pencilling in a 3% year-on-year slide in the fourth and final period at $2.83.

This is Apple’s third profits slide of the decade. The previous slumps were related to iPhone product cycles and this one may be no different, given slower-than-expected take-up of iPhone X after some meaty price hikes, a slowdown in China and concerns over lengthening product cycles as cost increases make Apple buyers ponder whether the incremental functionality is worth it or not.

Source: Company accounts, NASDAQ.com, consensus analysts’ forecasts

This does raise the stakes for the iPhone 11.

Although Apple has stopped releasing iPhone units – itself not a great sign, in all honesty – the firm has continued to publish revenue figures.

Sales fell year-on-year for the third straight quarter last time, down 12% to $26 billion and fans of the stock will be looking for improved momentum here.

That said, services and wearables have taken up some of the slack. Their combined sales rose by 22% in Q3 to $17 billion, some 32% of the group total (up from 19% three years ago). There seems little reason to expect app sales to stumble, barring perhaps a nasty recession, and they also make Apple customers sticky and more likely to upgrade their devices in the future, creating a bit of a virtuous circle.

Source: Company accounts

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

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russmould's picture
Written by:
Russ Mould

Russ Mould has 28 years' experience of the capital markets. He started at Scottish Equitable in 1991 as a fund manager and in 1993 he joined SG Warburg, now part of UBS investment bank, where he worked as equity analyst covering the technology sector for 12 years. Russ joined Shares in November 2005 as technology correspondent and became Editor of the magazine in July 2008. Following the acquisition of Shares' parent company, MSM Media by AJ Bell Group, he was appointed AJ Bell’s Investment Director in summer 2013.