WWDC 2013, Wall Street, and what it will take to get Apple stock moving again
Starting first thing in the morning, Apple’s World Wide Developer Conference opens its doors. Tim Cook and other execs will take the stage to share all that is new from Apple. And unless you’ve been living under a rock you know that Apple’s share price has dropped from $700 last September to below $400 in April, and has now recovered slightly to about $440 as I write this.
The obvious question to ask about the stock is, “Will WWDC get things moving again?” Of course I don’t know the right answer. I don’t have a crystal ball and I don’t think it’s particularly useful to try to pick off short term movements in a stock. But it’s still fun to talk about, and with the longer term in mind it can still be useful to discuss what next week means to Apple.
We all know that analysts and investors have been crapping on the stock for a few reasons. Most of them relate to fears of Apple losing its momentum (growth), losing its cool factor, and being attacked by Samsung’s highly successful Galaxy lineup. Oh, and of course people are afraid that Apple will start to go after the lower end of the market meaning that margins suffer.
the last couple of big upward movements came on the back of earnings releases, not developer events.
When looking at the stock, I can’t help but notice the last couple of big upward movements came on the back of earnings releases, not developer events. For example, Apple had a major breakout above $400 in early 2012, and started its climb towards $600 following the January earnings release. It then pulled back somewhat, and resumed its climb (reaching $700) after the July 2012 earnings call. Last year’s WWDC hardly moved the stock at all. But let’s dig a bit deeper. Obviously we know iOS is more important to Apple’s stock price than MacOS. The revenue split in favour of iOS is undeniable. And we also know that at WWDC 2012, the big reveal of iOS6 was much more about Apple than it was about adding new features.
But WWDC 2013 should be different. iOS7 is coming. Johnny Ive and Craig Federighi are in charge now. What will they bring? We’ll find out Monday. But even more important ... will Apple add new services (iRadio?) Will they dramatically improve the limited iCloud service? Can Apple ignite Wall Street’s interest again?
Wall Street responds to numbers. Numbers are driven by products.
Perhaps. I’m not counting on it unless we get more than a glimpse of some of these new game changing products that Tim Cook says Apple still has up its sleeve. Wall Street responds to numbers. Numbers are driven by products, and WWDC is where many new things are announced. Wall Street’s typical reaction? Finance experts suddenly become product reviewers and revise their financial models slightly as a result. Usually no major estimate changes come out of these events, and it is these estimate revisions that drive stocks in the short term.
But does WWDC matter? Of course. It’s one of many paths in the long term evolution of Apple. I’m a long term shareholder of this company and I’m incredibly excited about what they’ll unveil on Monday.
In the mean time, I’m still pleased to see that so many developers still support iOS before they bother with Android. Twitter’s Vine app only hit Google Play five months after being available for iOS. As long as this kind of developer behavior is commonplace, I don’t think Apple has anything to worry about.