Apple Inc. (NASDAQ:AAPL) stock might not look that attractive these days, but that doesn’t change the fact that whenever the company launches something, it almost always turns into a bit hit. Apple is hosting another big event on Monday, March 21; will it be enough to whet investors’ appetites again?
Apple stock had a tremendous bull run in the past 10 years, and it really shouldn’t come as a surprise. That’s because the launch of the “iPhone” essentially brought us into the smartphone era; the “iPad” turned out to be another huge hit, despite what many people were saying when it first released; and Apple’s lineup of “MacBooks” also enjoyed mass market success.
AAPL stock’s giant surge was based on the success of Apple’s hardware products. However, the same thing that sent it through the roof could also bring it to the floor. And that’s exactly what happened since the second half of last year.
Due to concerns that iPhone sales might slow down, Apple stock has been beaten to the ground. The stock reached over $132.00 a share last July, but by this January, it plunged nearly 30% to the low 90s. Considering that Apple is the largest company in the world by market cap, the huge drop in its stock price reflects just how big of a concern the company is facing.
However, the story doesn’t end there. Since hitting a low in January, AAPL stock has climbed more than 12%. Could this be the start of a major turnaround?
This Could Be Huge for AAPL Stock
The center stage of Monday’s event is expected to be occupied by a small but new iPhone. You see, fans of smaller phones haven’t really been able to enjoy newer products lately, and it’s not just at Apple; every smartphone maker seems to be making phones with bigger and bigger screens. It’s the trend in the smartphone business.
Apple is expected to launch a four-inch model rumored to be named the “iPhone SE.” It will have the size and screen resolution of the “iPhone 5” series, but with much more powerful specs. According to Bloomberg, the iPhone SE could feature the latest A9X and A9 chips, which would make the smaller iPhone just as powerful as the flagship iPhone 6S. (Source: “The Most Important Apple Executive You’ve Never Heard Of,” Bloomberg, February 18, 2016.)
The iPhone SE would replace the “iPhone 5S” as the most affordable entry-level iPhone. Although it won’t be the flagship model, it might be able to make some serious money for Apple.
According to Amit Darynani, an analyst at RBC Capital Markets, the iPhone SE could net in 10 million unit sales this year. At an average selling price of $550.00, the four-inch device would contribute $5.5 billion to Apple’s revenue. (Source: “New 4-inch iPhone Expected to Add $5.5 Billion in Sales for Apple,” Apple Insider, March 8, 2016.)
The Bottom Line on AAPL Stock
Other than the iPhone SE, Apple is also expected to introduce a new 9.7-inch iPad and provide updates for the “Apple Watch” operating system at Monday’s event.
While these things might not seem that exciting, sentiment has already started turning bullish on AAPL stock. In the second half of February, Apple stock’s short interest declined 16.4% from 56,750,479 to 47,436,374. Add it all up and you’ll see that the worst could be over for AAPL stock. (Source: “Apple Inc Short Interest,” NASDAQ web site, last accessed March 18, 2016.)