Today, Apple (AAPL) is gearing up to introduce its highly anticipated iPhone 15 product line, alongside the latest watches and AirPods. According to reports from Bloomberg News, the upcoming iPhone lineup will include two models tailored for budget-conscious buyers and two premium models for those seeking top-tier features. Historically, an Apple product launch has been an exciting event for the company’s stock, but it’s worth considering the potential for a better buying opportunity in the weeks following the official release.
In the lead-up to the unveiling of any new Apple product, there’s usually a surge in the company’s stock price. However, this year has presented some unique challenges. Following a report of declining sales in the third quarter, Apple’s stock experienced a dip in August. This dip wasn’t unexpected, given the industry-wide slowdown that has led to reduced demand for phones, computers, and tablets. Additionally, concerns arose regarding government restrictions on iPhones in China, which happens to be Apple’s largest international market. These factors contributed to the stock’s decline, erasing nearly $300 billion in market value since reaching a record high on July 31.
Traditionally, September has been a challenging month for Apple, with the stock recording an average decline of -4.5% over the past five years, compared to a -3.2% decline for the S&P 500 stock index. However, there’s been a noticeable shift this year. October has emerged as a strong month for Apple’s stock, with an average gain of +3.8% during this period. Deepwater Asset Management remains optimistic, stating that for long-term Apple investors who view the company as increasingly consumer-focused, these recent dips could be viewed as valuable opportunities.
Despite the recent obstacles, Apple’s stock has managed to maintain a +38% gain for the year. Apple’s price-to-earnings ratio is currently estimated at 27 times earnings, which is lower than the peak of 30 times observed in July but significantly higher than the historical average of 18 times over the past decade. According to data from Bloomberg, analysts anticipate a rebound in the company’s annual revenue in 2024, following a projected drop of nearly -2.9% this year, mainly due to price increases on its premium iPhone models.
Apple’s annual iPhone sales had remained relatively stable at around 200-220 million devices since 2016. However, the company opted to raise prices on its high-end models to offset a slowdown in sales. While annual unit sales of iPhones have remained consistent over the past seven years, revenue from this segment has increased by nearly $70 billion during the same period. Mahoney Asset Management is bullish on Apple’s latest product lineup and believes that recent performance has laid the foundation for a potential rally in October and the year’s end.