Apple (AAPL)’s Worldwide Developers’ Conference (WWDC) is always eagerly awaited, but the consensus view seems to be that this year’s, which begins today, is an exception. Most projections seem to be along the lines of this, at Slate.com, suggesting that this year’s event will be somewhat boring.
No major innovations are anticipated and in the above referenced article, Christina Bonnington concludes that that will be good for users. If, as expected, the conference turns out that way, it will, based on the history of Apple’s stock during and shortly after the WWDC, also be good for stockholders, and potential buyers should act now rather than wait.
Those moves fit into a pattern that I identified last year when I pointed out that the WWDC had prompted a drop in Apple in nine of the previous ten years. My point then was that those declines had kept the stock depressed for a week or two, but that provided investors with a chance to buy AAPL at a discount.
When a pattern repeats over ninety percent of the time, it is normally fair to trade on the assumption that it will again, which would suggest that the smart move would be to wait for the drop, then buy AAPL later this week or early next week.
This year though, that could be a mistake.
The expectations for no major innovations or product announcements is, ironically, the reason that AAPL is likely to pop this year as the WWDC takes place, rather than falling.
In the past, new products have usually resulted in a wave of skepticism from traders. Each time they seem to believe that the public will tire of yet another “must have” release at ever increasing prices. Each time they have been wrong, and as the order numbers for the new products become known the stock has gained back losses and then some. This year, with the expectation that the WWDC will not see any major launches, that skepticism is absent and AAPL can respond positively to any news that comes out of the conference.
An argument can even be made that that will be true if the conventional wisdom is wrong, and Apple do use the occasion to announce a new product or two. Should that happen, the lack of expectations and the element of surprise would combine to make a jump in the stock far more likely than a drop. That is especially true given current bullish tone to the overall market.
The pessimism that usually follows the WWDC is a classic example of traders with a short-term view losing sight of the wood for the trees. Many go into the week looking for a reason to sell and, unsurprisingly, usually find one. If this week goes as expected, however, with the focus on improving the user experience rather than pushing the boundaries, the focus will be on the fact that Apple remains arguably the most successful company in the world and is back to robust growth.
Therefore, waiting for the pattern of a decline in the stock after this year’s conference is not advised.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.