Apple Inc’s (NASDAQ:AAPL) launch event later today is a big event in the tech industry calendar and one that is expected to see the firm finally unveil its first 5G-capable smartphone.
The reveal of the iPhone 12 range is expected to encompass four devices in three sizes, which are scheduled to go on sales on October 23. The largest device is expected to have a 6.7-inch screen, the middle two 6.1 inches and the smallest 5.4 inches.
The larger devices are expected to also feature higher-end technology, possibly falling under an iPhone 12 Pro label, while the smallest model, somewhat predictably, could be dubbed the iPhone 12 mini. However, there are whispers that the news phones may be sold without headphones, chargers or plug adaptors included in the box.
Aside from the new iPhone, Apple could also unveil a new range of over-the-ear headphones as part of its AirPods range as well as Bluetooth trackers, dubbed Apple AirTags, that users can attach to keys and other items. There is also likely to be buzz around Apple Silicon, the company’s in-house computer chips.
Some may also be on the lookout for any updates on the company’s new streaming service, Apple TV+, which is aiming to go toe-to-toe with the likes of Netflix Inc (NASDAQ:NFLX), Amazon Inc’s (NASDAQ:AMZN) Prime service and Walt Disney Co (NYSE:DIS).
But the launch could already be baked into the value fo the shares
While the launch of a new iPhone tends to result in a boost for Apple’s shares, one analyst has questioned whether or not investors have moved ahead of themselves and baked the additional value into the stock already.
“The stock’s history suggests that the markets have a classic habit of buying on the rumour and then selling (or at least pausing for breath) after the fact”, said AJ Bell investment director Russ Mould.
“The potentially tricky bit this time is the degree to which Apple has already surged ahead of the new range of launches…This could mean that a lot of the good news is already baked into the stock and its valuation even before the launch announcement from chief executive officer Tim Cook”, he added.
Mould highlighted that this attitude suggested investors believe profits and sales for Apple will grow quickly and that the tech giant is “a growth company, with strong management, a cast-iron balance sheet and a competitive position that makes it hard to dislodge”.
“Yet the firm’s recent growth record is not quite as stunning as it seems”, Mould said, pointing out that while the company’s market cap has surged 242% over the last five years, helped in part by share buybacks, despite only a 6% increase in net profits.
“To justify this, investors will acknowledge the way in which share buybacks have boosted earnings per share – but that is financial engineering and not product engineering so its value surely cannot be that high. Investors must therefore decide whether the monster run-up in Apple’s shares ahead of the new product launch and its valuation premium are defensible or not”, he concluded.
Shares in Apple were up 1.4% at US$126.16 in pre-market trading in New York on Tuesday.