Or not, perhaps. This morning when stock markets opened, Apple and AT&T stock limped, rather than roared, out of the gate — with Apple prices remaining largely flat.
If you’ve been following the crazed orgamso-frenzy hype around the iPhone, and the Lalapalooza like atmosphere around the Palo Alto Apple store, you might have had a different picture in mind. Heck — I sure did.
But I think that investors (and institutional ones) are looking for harder facts to back up the hype. Namely that Jobs either did too well a job (ha ha, what a lame pun) in stocking his stores with iPhones so that there was no shortage, or that the demand was far lighter than what was actually expected — although I have no feel for how much is “light” in consumer electronics. $170 million worth of merchandise and over 500k units sold seem like a pretty robust to me.
Over the long term I actually do expect this to change for two reasons.
- The iPhone problems will be fixed (one day): Many of the issues around this first generation iPhone will be solved with other iterations of the device, namely problems with ringtones, storage size, porting phone numbers, the overall cost, and other tech issues we haven’t even heard about yet. Apple has a long history of cranking out advanced models at a nauseating clip. First-adopters with respect to the iPod can attest to this.
- Word of Mouth Will Begin To Take Over: Once iPhones are out in circulation, word of mouth will take over from the mainstream media hype. Just like the demand for Wii’s continued well past last Christmas as more and more people saw and touched it, you can bet the same thing will happen with iPhones — in spite of the price.
The interesting thing I found, of course, is the whole disconnect between the tech coverage of the iPhone and the flat stock price. Is it really because techies are first adopters who “get it” in this circumstance? Or is mainstream America wary of the hype? Or, is it really a case of the demand being underestimated? Or, perhaps, is everyone waiting for the price to fall and there to be a change to a faster kind of network?
The iPhone story hasn’t yet been fully told, I think — in fact, now that the release euphoria is over, I suspect its just begun. ;)
[yes, I do own shares of Apple]
6 Comments
My (admittedly limited) understanding is that expectations for the iPhone have already been built into AAPL’s share price via the stock run-up since January, hence no big surge the day after the iPhone was released.
I’d argue that Apple stock had already appreciated in advance of the iPhone’s debut. It has had quite a run to all-time highs, and the fact the iPhone debuted wasn’t a surprise to anyone.
(I don’t own Apple stock right now, unfortunately)
The built in expectations was something I considered after I wrote the post — good observations folks ;)
Either way, Apple has just dropped another bombshell and is poised to reap more from it in the following weeks and months.
I just wonder how the other phone manufacturers would react to this. First it was Safari on Windows now the iPhone, Apple is really starting to ignite fire in big markets.
Where’s Micro$oft? ;)
I agree with rslux and Louis G: I think the market believes that Apple stock is already appropriately priced given the release of the iPhone. As someone who bought her initial 50 shares at $13.50/share at least one stock split ago, I’m pretty satisfied with the current price.
Maria, rslux and Louis hit the nail on the head. The only change in APPL would have occurred if there had been no lineups and reports of less than six figure initial weekend sales. Markets run on expectations (usually of stock analysts) and are not necessarily timed to actual events. Watch for APPL’s next quarterly report when they should be reporting on unit sales and associated data as well as impact of iPhone on iPod sales momentum.
Last week, RIM’s Q1 report exceeded market expectations on revenues and units significantly and look what happened to their stock — up 18% last week on earnings announcement — and up another 7% today — because, now that iPhone is out, analysts don’t see it as a threat to Blackberry. From a Street.com report “RIM Run-up Rebuffs iPhone Debut”:
“Investors are getting more confident that RIM has the business acumen to compete with the consumer-electronics giants,” says Tony Carbone, an analyst with mutual fund manager RCM Capital, which holds RIM shares in its mutual funds and separately managed accounts.
[I do own a small quantity of RIMM bought about nine years ago.]
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