Apple's share price and people's expectation

Apart from Apple's iPhone and iPhone 5's releases, the share price of Apple tends to decrease after new iPhone's releases. This is largely caused by the unbalance between the new iPhone and people's expectations about iPhone. The decrease in Apple's share price shows people's expectations are often higher than the actual products even when Apple was still very good at keep its secrets of its new products. Since Cook became the CEO of Apple, Apple has become not so good at keeping its secrets and some people even get their hands on new products even before releases. Under such circumstance, the share price would probabily more reasonable to be flat after the release since the product has already been shown to the public and there is not any surprise. However, this did not happen. This shows several things. Firstly, the pricing has been key elements for analysts to estimate Apple's future revenues. Not until the announcement, the prices are not certain yet. If price drop is caused by this reason, then we may conclude analysts often think Apple overprices its products. Secondly, the release of other products also matters. Is this really true? I think that this may be true only recently, when Apple's iPad performs quite well in the tablet market. However, since the first iPhone was released, iPhone is the dominated product among all Apple's products. Price drops mean investors do not other products' ideas. Thirdly, investors may expect more from the new version of iPhone they have already seen. This could be a very positive sign that shows the magic of Apple has disappeared yet. However, after too much disappointment, the magic will eventually vanish.

The share price of Apple dropped today after yesterday's release of two new versions of iPhone, The share prices for Apple's suppliers dropped even more sharply. This definitely shows many analysts are either unhappy about the new products or unhappy about the prices for new products. To be honest, I am personally a bit disappointed about the new products; however, I still believe the sales of iPhone could not be so different from previously. There are several reasons. Firstly, the scale of the company matters. Apple is defintitely one of the most valuable companies around the world (Goolge may be the only competitor to Apple). Therefore, the support from the financial sector is undoubted. Its cash flow is massive and the cut in taxes in America will make large companies like Apple more profitable. Secondly, its Appstore makes its existing customers harder to switch to other smartphones. When you are a longer iPhone user, you become more difficult to switch to other smartphones, as the applications purchased cannot be transferred to another un-iPhone smartphone and this increases consumers' costs of switching phones.  Thirdly, Apple could become the leader in the facial recognition sector, as it intorduces FaceID. Although this idea is not new, the previous technologies are not as good as Apple's FaceID, as they are often unfriendly with users wearing glasses unlike Apple's one. This may not be seen as a big thing in the smartphone sector, as using fingers to unlock smartphones is not harder than using facial recognisation (and during the keynote, iPhone even fails to recognise user's face for one due to the angle facing the camera); however, this could be transferred to other sectors, for example, for laptops and computers, it is more user-friendly to use facial recognition to unlock a computer. The benefit of becoming the leader in a increasingly popular sector does not need any more explanation.

Overall, the magic of Apple has disappeared yet, despite the announcement of "boring" products I think, and most financial institutions will still stand behind Apple and future American tax reforms seem to be benefiting these large companies; therefore, I think that Apple's stock may remain strong and stable.