March is finally coming to a close. While the first quarter of the year has not been an easy one for Apple stock, investors now hope that April will be a more profitable month for shareholders of the Cupertino-based company.
The start of the ramp
The first chart below shows that, over the past 5 years, Apple share price has increased an average of 1.2% in April. Considering a stock that has risen over 30% per year during this period, the historical performance in the upcoming month has been lackluster.
It is interesting to note, however, that April also marks the beginning of a ramp up. Historically, Apple stock has performed better by the month in the spring, and peak performance has been achieved in August. April, therefore, tends to bring “good vibes” for the shares.
The picture looks a bit different when we (1) extend the time horizon to 10 years and (2) consider only the alpha over the returns of the S&P 500. The graph below shows that April has historically been weaker than the market average, by roughly -1%.
Still, April tends to precede a much better period for Apple shares in the warmer months of the year compared to the broad market. Therefore, should history repeat itself, April may not be the very best month for Apple investors – but it could represent the beginning of the next leg higher.
Why Apple stock behaves this way?
Squint hard enough, and one can find trends in nearly any set of data. So, none of the above matters much without context.
Looking at the charts above, I can slice the seasonality of Apple stock price performance as follows:
- Outperformance through most of the spring and summer
- Underperformance ahead of and during the year-end holiday season
- Lack of clear direction between the first calendar quarter and April
The logic that supports the trends above is that investor enthusiasm towards Apple begins to mount right around April. This is the time that a new set of devices tend to be launched, including iPads and Macs, ahead of the summer and back-to-school season. It is also in the summer that chatter over the new iPhone begins to surface, and the stock probably reacts in anticipation.
The holiday quarter is “sell the news” season for Apple stock. By November, investors already know everything they need to know about the new iPhone, Black Friday sales, and the expected results of the busy shopping weeks. It is time to lock in gains.
By January, not much is happening for the Cupertino company, as it enters “limbo”. The first and second calendar quarters of the year are the slowest for Apple, from a revenue-generation perspective. This is probably when investors have little conviction over whether to buy or sell the stock.
Are investors excited about the chance of a rebound in Apple shares in April, or are they fearful of underperformance? I asked Twitter for its opinion, see poll below.
Explore more data and graphs
The graphs used in this report were provided by Stock Rover. I have been impressed with the breadth and depth of information on markets, stocks and ETFs that this platform provides. Stock Rover also helps to set up detailed filters, track custom portfolios and measure their performance relative to a number of benchmarks.
To learn more, check out stockrover.com and get started for as low as $7.99 a month. The premium plus plan that I have will give you access to all the information that went into my analysis and much more.
(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)