On 13th October 2020, Apple announced the iPhone 12 series, where CEO Tim Cook ushered in ‘the next generation’ for the brand. The virtual event was a whirlwind for the tech -giant, with the launch four iPhone 12 series devices: the iPhone 12, a smaller iPhone 12 Mini and larger iPhone 12 Pro and iPhone 12 Pro Max. Apple also flaunted a new HomePod Mini, a cheaper take on its smart speaker that more directly competes with Amazon and Google’s Nest.

Immediately post the announcements, the market evaluation of the company fell by an astounding $81 billion. As the company unveiled their 5G devices lineup spread across four models, their share price observed a drop by 4% on the launch date.

Apple iPhone 12 Series Highlights

Some of the highlights of the iPhone 12 that make it an enthralling upgrade are the cameras, display, 5g, A14 bionic chip, Lidar scanner for pro models and the improvements in design. One of the most awe-inspiring parts of the iPhone 12 series is the AMOLED XDR displays with HDR certification. Apple claims that the new phones would feature the company’s brightest display ever, with the screen set to be ‘tougher than any smartphone glass’’. The Ceramic Shield technology gives the screen four times the chance of survival without breakage.

The A14 Bionic chip unfolds a new chapter for the company. Being the first 5nm chipset, it is the most powerful and power-efficient chip in any smartphone. The LIDAR scanner customises the camera for finer autofocus and improved Augmented reality experience.

Finally, the design change was the one thing that every iPhone fan was anticipating.

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Reason for the Fall

According to a report by Markets Insider, Apple shares traded ‘at an intraday loss’ just before the event, but ‘slid further’ after the grand reveal – with $81 billion (£62bn) wiped from Apple’s market value. The stock recovered some losses and closed down at 2.7 per cent.

With the launch of the 5G devices, the company took a step forward to remove the charging brick to curb the environmental impact. The phones will be the first to exclude wired earbuds and power adapters, as an attempt towards full carbon neutrality. Though the company made some highly anticipated additions to the design and features, the share market did not receive the announcement very well.

The announcement was also overshadowed slightly online about the new iPhone 12 bearing an uncanny resemblance to the iPhone 5, due to its curved frame.

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A historical view of the price movements might shed some light on the issue. A study conducted by Bespoke Investment Group reveals that Apple’s stock tends to surge in the month before big product announcements. However, after the product is presented, shares tend to fall or fluctuate for a few days. Money Beat has called it a “typical buy-the-rumour-sell-the-news type of occurrence.”

“The fall in Apple’s shares could be attributed to the over expectations that the market had from the event, including in terms of product announcements alongside the iPhone 12 series,” said Prabhu Ram, Head of Industry Research Group, CyberMedia Research.

Market Expectations for iPhone 12

As Apple jumps into the 5G market, it’s expected to immediately become a huge player. According to Strategy Analytics, this year, Apple is likely to ship 50 million 5G iPhones, which would make it the second-largest 5G vendor in 2020, in less than three months of sales. Samsung shipped more than 6.7 million Galaxy 5G smartphones the previous year after its first 5G phones hit the shelves in May 2019. Analysts also expect the new iPhones to drive a stronger-than-usual cycle of upgrades among its customers.

Analysts think that there will be more than 350 million upgrades from older models to iPhone 12 series this year. Suppliers and producers are also gearing up for increased demand in the iPhone series 12 models, with the 6.7-inch model expected to sell the most.

The inclusion of 5G marks the first move forward in iPhone’s cellular technology since 2013 when the iPhone 5 released. After the iPhone X’s 2017 release, the iPhone 12 also becomes the first major design overhaul for the handset. The phones will connect to Verizon’s ‘Ultra-Wideband’ network, with Verizon CEO Hans Vestberg adding: “5G just got real.”

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Conclusion

As we observe the iPhones’ pace of growth slacking, investors are wondering what the next big growth driver will be for Apple. In recent times, the services and wearables businesses have given Apple’s sales and profits a boost.

Services include offerings like App Store, AppleCare, iCloud, Apple Pay, Apple Music, Apple TV+, Apple Arcade, that have undergone a push lately. In the June 2020 quarter, Apple’s services revenue rose 15% to  $13.16 billion.

Meanwhile, Apple’s Wearables, Home and Accessories unit saw sales jump 17% to a stunning $6.45 billion in the same quarter. The unit includes wearables like the Apple Watch, AirPods wireless earbuds and Beats headphones. It also consists of the Apple HomePod wireless speaker and other miscellaneous gadgets.