Apple, Verizon, AT&T Stocks Down Following Verizon iPhone

| Apple Stock Watch

Shares in Verizon, AT&T, and Apple all traded lower in the wake the announcement that Verizon will be carrying the iPhone 4. Sprint and T-Mobile parent Deutsche Telekom also took losses, as the markets adjusted for expectations met and fears realized.

AAPL and VZ had both experienced a run-up leading up to Tuesday’s announcement, meaning that today’s news that Verizon would sell a CMDA iPhone was baked into the price. For instance, Apple’s stock rose from a closing price of $331.29 per share on Wednesday January 5th to a new closing high of $342.46 on Friday (Monday’s trading dropped the price to $340.22), a rise of 3.4% after the Verizon media event was announced.

As more general rumors and leaks pointed to a Verizon iPhone starting in the Fall of 2010, Big Red’s stock took a steady uptick, as well. From November 29th to January 5th, VZ rose from $31.90 to $37.67, a significant gain of 18.1%. Once the company actually announced its media event, profit taking kicked in, but even Monday’s close of $35.92 represented a 12.6% increase from the end of November.

Accordingly, it’s no surprise that once today’s news was finally realized, more investors took profits, sending the stocks lower. Apple ended the day at $341.64, down $0.815 (-0.24%), on strong volume of 15.6 million shares trading hands. VZ ended the day at $35.36, down $0.56 (-1.56%), on heavy volume.

AAPL Chart

Source: Yahoo! Finance

At the same time, AT&T’s stock had climbed from $27.70 on November 29th to a high of $29.98 on January 5th, a gain of 8.2%. Once Verizon announced its media event, the stock headed South, ending Tuesday’s trading at $27.91, down 0.430 (-1.52%), on heavy volume of more than twice the average, almost erasing two months worth of gains.

German giant Deutsche Telekom, the owner of T-Mobile in the U.S. has been steadily losing value since the beginning of November, and today’s news did little to delight investors. DT ended the day at $12.46, down $0.11 (-0.88%). Shares in Sprint dropped sharply, ending the day at $4.40 per share, down $0.18 (-3.93%).

The long and the short of it is that the near-term upside for Apple and AT&T were already baked into the price, and there were no surprise aspects of what the two companies have so far announced about their deal. At the same time, AT&T losing its exclusive contract with Apple was exactly what investors feared would happen, and confirmation of that fear sent the stock a little lower.

Investors similarly punished T-Mobile parent and Sprint, as it would appear that the Verizon deal means the iPhone will not being appearing at either carrier any time soon.

*In the interest of full disclosure, the author holds a small share in AAPL stock that was not an influence in the creation of this article.  

Comments

Lee Dronick

Investors similarly punished T-Mobile parent and Sprint, as it would appear that the Verizon deal means the iPhone will not being appearing at either carrier any time soon.

I thought that Mr Cook said that the iPhone was not exclusive to Verizon? I took that as implication that there could be a Sprint CDMA iPhone.

Bryan Chaffin

It’s not exclusive to Verizon, but the reality to investors is, IMO, that Sprint (etc.) didn’t a deal today.

Constable Odo

Typical “buy on rumor, sell on news” reaction.  Or else the world was expecting an LTE iPhone on Verizon.  Since there are some Android smartphones that have LTE, maybe Wall Street and investors figured that Apple was behind the eight-ball.

John Molloy

Apple was only down .24% at the end of the day, hardly “tanking”. We had a huge up day yesterday - this is as Constable Odo put it a buy on rumor sell on the news reaction.

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