The newest gem in the never-ending Apple Inc. (AAPL) iPhone lineup is almost here. The iPhone 13 is supposedly hitting shelves on Sept. 24. We’ve been conditioned to eagerly await these releases as big deals. Some people camp out waiting for the phones, just adding to the hype. Others are invariably disappointed by yet another camera upgrade or slightly better resolution of the display. Either way, the weeks leading up to an iPhone release floods newswires with Apple news.
- Upcoming iPhone releases receive lots of news coverage.
- Does the iPhone 13 even matter in the long-run?
- Apple‘s long-term sales growth will likely continue to attract Big Money to the shares.
It made me wonder: does it even matter? For me, the first step in answering this question was to see how much of Apple‘s sales come from the iPhone. The quick answer is that, for the past 10 years, the iPhone accounts for roughly half of Apple‘s revenue. As you can see in the chart below, the blue is the iPhone. Say what you want about Apple—the company is in the content game, media, software, apps … whatever. Apple sells hardware—and predominantly phones.
Something else you should notice is that there are somewhat predictable periods of waxing and waning. Over the long run, iPhone sales are steady. But there are ebbs and flows.
So, I wondered if there was a correlation to iPhone releases when I saw that. By now, we generally expect an iPhone release every two years or so. That’s true for major unit upgrades, but there are generally minor upgrades too.
I first stripped out Apple‘s iPhone revenue as a percentage of overall revenue. Then I overlayed each iPhone release since 2009. We see some patterns that I found interesting.
The first thing we see is that the iPhone releases happen an average of once a year. This inherently makes sense: to keep the money train rolling, keep rolling out product.
The next thing we notice is the wax and wane effect of new unit releases. Most releases coincide with revenue troughs as a percentage of total sales. Now this first seemed counterintuitive to me. Buying of units might slow down ahead of a new release as people hold off on the old model in favor of waiting for the new one. But interestingly enough, we notice some nice spikes before the releases of new versions of the unit.
It may be because incentives are offered on older models. Consumers know these things are darned expensive. Whether you pay one shot or monthly—a thousand-dollar phone is still a thousand-dollar phone. So, when a few hundred dollars get knocked off the older model, and the new one suddenly seems more expensive, consumers are actually incentivized to buy the older models.
Based on the chart above, I would actually anticipate iPhone revenue to taper off for a quarter or two as consumers just flooded Apple with sales of the iphone-12. I’d expect revenue to pick up again two or three quarters down the line.
Now that brings us to the title question of this article: does the iPhone 13 even matter? One thing we do see in the total revenue components chart above is that, when one sags, others grow. Now keep in mind that this is expressed as percent—so revenue will always total 100%. But the chart shows that other areas compensate for Apple‘s revenues when iPhone sags.
Now it looks eerily similar to a stock price chart. This is the cool thing: in the short term, the stock chart can look choppy and unpredictable. Looking at the following one-year price chart of Apple, we see plenty of peaks and valleys. It can feel volatile and even after the pandemic crash.
You’ll also notice that Big Money buys into Apple and it also sells out. The one-year chart gives us some confidence that we may want to buy when Big Money sells for a short-term trade. At my research firm MAPsignals, we track these Big Money signals, looking specifically for this type of trading activity.
So just like the iPhone revenues going up and down within a year, the stock price can gyrate in an equally frustrating way. But when we look long term, that’s where things get both more interesting, and more predictable. That’s because, in the end, what really matters is how Apple‘s revenue is growing. Look at these charts showing Apple‘s sales growth and iPhone sales.
iPhone Unit Sales
It is clear as day. This company likely isn’t slowing down sales anytime soon. Now let’s line that up with the following chart of Apple over a similar time frame.
I’ve notated areas where the stock increased in price and volumes (but only a few of them to conserve space!). I pay attention to these signals because, when a fundamentally strong company like Apple is getting Big Money love, that’s usually bullish. Very few stocks have long-term charts like this … i.e., a Big Money magnet.
Clearly, the trends line up. Sales are growing in a monstrous way, which has been driving—at least in part—the stock price to ever far-reaching heights.
The Bottom Line
Apple‘s new iPhone 13 release will likely drive the headlines for the next few weeks. It’ll cause a stir and get iPhans to sleep outside stores for the new gadget. But don’t overestimate its impact to Apple‘s business. It’s the normal course of things looking back at least 10 years. And if anything, iPhone sales should sag the next quarter or so if history repeats itself.
What investors should focus on is the long-term sales growth and stock appreciation trend of Apple. And if these figures keep growing like they have, my bet is that Big Money will keep finding its way into the shares. Just like the iPhone 14, and 15, ad 16, and 17, and …
Disclosure: The author holds no position in AAPL at the time of publication.