Apple (NASDAQ: AAPL) is the most valuable company in the world, worth more than $650 billion. Driving more than 60 percent of its revenue is the iPhone, and it’s about time for yet another new one. If you own Apple stock, you’ll want to know what the newest model, the iPhone 8, is packing to get customers excited.
The tech giant’s much anticipated annual launch event is coming Tuesday. Here’s what to expect from the iPhone 8 — and what aspects of the event markets will be most avidly interested in.
iPhone 8 features. Does AAPL stock, already up 40 percent in 2017, have more room to run? Or is this a “buy the rumor, sell the news” sort of scenario? That will depend on a few different things.
First, a look at the features markets are definitely expecting in the iPhone 8; if one of these isn’t offered, Wall Street probably won’t respond well.
[See: 7 of the Best Socially Responsible Funds.]
For the first time, Apple will release three new iPhones. The first two will be called the iPhone 7s and 7s Plus, and will be new iterations of last year’s iPhone 7.
Those two phones will certainly matter to the AAPL stock price, but Wall Street — and most consumers, for that matter — will be focused on what the flagship, premium iPhone 8 will look like and do.
The 10th anniversary iPhone is expected to be the priciest smartphone Apple has ever sold, with analysts expecting it to go for $999. The two lower-cost models are expected to start at $649 and $769.
At $999, AAPL better be packing this so-called iPhone 8 full of features. And that’s exactly what analysts expect will be happening.
“We expect the iPhone 8 will come with the OLED screen, wireless charging capabilities, 3-D sensing technologies for facial recognition and AR abilities, as well as other things,” says Angelo Zino, hardware and technology equity analyst at CFRA.
One of those other things include a 5.8-inch screen (compared to 4.7 inches for the iPhone 7) that essentially spans the whole front of the phone, meaning there will be no bezel or home button, the functions of which will be taken over by gesture-based controls.
Two major tea leaves to read. Those are the primary functions investors are expecting from the phone, but there will be a few details even more important for AAPL stock owners to mind at the announcement tomorrow.
The first: supply. Will the demand for the iPhone 8 significantly outstrip supply? CEO Tim Cook won’t exactly spell that out for you, but there will be clues.
“It’s gonna be very important with regards to the timing of the iPhone 8 launch. We do expect it to take place on the 22nd,” the same date as the other two phone models, Zino says. A delay beyond the 22nd would indicate supply shortages.
“Will it be limited to certain regions initially due to supply constraints? I also think that’s very likely,” Zino says.
The second tea leaf? Pricing of the iPhone 8. While the consensus expectation is for a $999 phone, some put the range as high as $1,200.
But what’s arguably even more important when it comes to pricing is what sort of promotional activities the cellular carriers do — since that will reflect the true price that consumers pay for their smartphones.
[Read: The 10 Most Anticipated IPOs of 2017.]
“I would expect that within hours you’re going to get some pretty attractive promotions from T-Mobile ( TMUS) and Sprint ( S),” Zino says. “Those two companies know it’s the biggest opportunity in three years to really steal subscribers from AT&T ( T) and Verizon ( VZ).”
Zino adds, “It may be something along the lines of trading in your iPhone 7 or 6s and then instead of that $999 price point it may only be 400 to 500 bucks.”
Add in a two-year payment plan and suddenly you’re only looking at about $20 a month.
Steve Manning is chief commercial officer of FutureDial, which manages mobile device re-commerce for some large device manufacturers and service providers. He agrees that promotional activities will be vital for investors to keep their eyes on — but thinks they may not actually be as steep as Zino expects.
“Carriers on these lease and installment programs have gotten people used to a $30 to $35 per month payment. So I don’t think they’ll have to chase people down below that,” Manning says.
“If you could put a deal together that said, ‘Hey, bring in your old iPhone 6 or 6s or 7 — we’ll get you an iPhone 8 and you’ll have the same monthly installment as you had for your prior phone, that’ll probably work for the consumer,” Manning says.
That’s likely true. But if carriers — T-Mobile and Sprint in particular — do end up getting hyper-competitive and offering insane deals just to steal subscribers, not only do consumers win but so does Apple. And AAPL stock owners, of course. The lower those monthly payments are, the more people will be able to afford Apple’s newest, highest tech smartphone.
Other products. Now, the iPhones aren’t the only products launching on Tuesday. The Apple Watch Series 3 — which is notably expected to have its own LTE connection ability, will also be unveiled to the public. The first two Watch models were really nothing to write home about, and other than the Red Sox stealing signals from the Yankees, haven’t really proven too useful to consumers.
“We do expect them to potentially roll out a new set top box as well, a 4K TV, which will potentially come with a better processor capable of streaming higher resolution 4k content,” Zino says. “But whether it happens at this event or at some point in the future remains to be seen.”
What AAPL stock should do. The question of the day ultimately remains: what will Apple stock do after all these product announcements? It’s already up 40 percent this year, after all.
[See: 7 Dividend Stocks to Benefit From Trump Tax Changes.]
Given the fact that the iPhone still accounts for more than 60 percent of company revenues, it’ll really depend on the reaction to that line of products, and most notably the iPhone 8. In particular, pay attention to the two “tea leaves” that Mr. Market will care most about — price point and hints at how well Apple can meet demand — and you’ll be better informed than the average investor.
More from U.S. News
7 of the Best Stocks to Buy for 2017
The 25 Best Blue-Chip Stocks to Buy for 2017
9 ETFs to Buy When the Market Tanks
Apple (AAPL) Stock: 2 Things to Watch in the iPhone 8 Announcement originally appeared on usnews.com
