Warning: iPhone announcements can make Apple investors lose money

This one could really cost you.
This one could really cost you.
Image: Reuters/Beck Diefenbach
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Remember what your mobile phone was seven years ago? It might have been a BlackBerry, but it was probably a Nokia. It probably didn’t have a touch screen or a data plan. Then Apple released the first iPhone. It was something completely different. Investors noticed.

Apple’s stock closed 7.1% higher than it opened on the day of the announcement. After five days, investors had driven the value of the Cupertino, California-based company up 12.32%.

Apple is expected to be announce two new iPhones on Tuesday, the iPhone 5S and the iPhone 5C. Investors will be watching the announcement trying to determine if the company’s new offerings can continue their success in a market flooded with a variety of similar phones from the plethora of manufactures that have sprouted up over the last seven years.

After the first iPhone release, each subsequent announcement has excited the market considerably less. Whereas the first iPhone was a paradigm shift, the second—iPhone 3G—was merely an impressive iteration: upgrading from EDGE to the faster 3G wireless network, adding GPS, and increasing storage capacity. Investors sold the company on the day of that announcement, pushing shares down 1.72% from their opening price. Five days later the company was worth 6.72% less on the stock market than before the reveal.

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More investor disappointment continued for the next two announcements—iPhone 3GS and iPhone 4—as Apple gained competitors. More recently, markets have rallied around new iPhone announcements. Five days after the iPhone 4S was announced, shares were up 3.8%. Over the same span after the iPhone 5 announcement shares prices rose 5.26%.

Recent success has not bucked the downward trend overall. Excluding the first iPhone release, Apple shares have traded, on average, 1.27% lower than the open on the day of the announcement and 0.52% lower five days later.