Buy the iPhone Hype, Sell the iPhone Launch

Pace the usual market dictum of “buy the rumor, sell the news”, the usual way to play Apple stock around the iPhone launch would be to hold the stock until a few days before the launch, and then sell it, perhaps as late as the day before launch.

Looking back to Apple’s iPod launch on October 23, 2001 — which might not be the the best example, given the proximity to 9/11 — Apple stock climbed 6% in the week leading up, and then fell 4.6% on the day the new iPod was unveiled.

Will the same thing happen with iPhone? A naive read says “Yes”, that we’re seeing the run right now. Apple stock is up 21% in the last month, and almost 5% in the last week. So, be selling your Apple stock on June 28th, right?

Sure, sell some — and sell some now, for that matter — but not so fast. The iPhone launch, like few other tech products before it, has become, for better or worse, a cultural phenomenon. There will almost certainly be people who hear about the launch via front page stories in the NY Times, etc., about long lines expected at AT&T/Cingular stores, and so on. In that regard it will be more like Microsoft’s Windows 95, a cross-over product that got buzz far beyond the tech community.

So, how did Microsoft’s stock do on Win 95 launch date? It climbed 1.2%, and a further 5% over the next week. Despite tons of hype about Win 95′s release, the company’s stock found cross-over retail appeal post-launch.

While I won’t argue that Apple stock will do the same, I also think the behavior of Apple stock around iPhone launch could violate more than a few naive rules about how you should trade tech company product launches.

Related posts:

1. iPhone: You Mean It’s a Cellphone, Too?
2. Cisco Gets in the Best Quote on the iPhone
3. Me on CNBC Talking iPhone
4. WSJ Tick-Tock on Apple’s iPhone/Cingular Deal
5. Engadget’s Apple iPhone Story & Stock Hackers