It's been called "Nerd Nirvana." Every year since 1983, Apple has held its Worldwide Developers Conference (WWDC) as a way to display its new hardware, software and technologies for developers. It was here that Steve Jobs first unveiled the critically successful and consumer-loved iPod and iPhone devices, which changed both the music and telecommunications industries.
However, despite all the industry-changing product announcements, Apple's investors continue to be unimpressed with the WWDC format. Like clockwork, the company's stock falls every Monday as the showcase begins and various software and other technological advances are revealed.
So what gives? Why is the consumer and tech world excited about Apple's upcoming product launches and Wall Street is not? It could be a case of too many hyped rumors.
A Decade-Long Pattern
Marking nearly a decade in length, Apple's stock has constantly closed below where it closed on the Friday before the WWDC kicks off. In 2003, Apple stock dropped seven cents after the WWDC. Likewise, in 2004, shares fell 61 cents. Every year the technology superstar's shares fall in a consistent pattern by the end of the conference.
With WWDC 2012 recently wrapping up, Apple stock's pattern of rising then falling during the keynote product launch remains intact. Apple's shares, which closed just above $580 on the Friday before the WWDC, peaked at $588 around noon, before steadily dropping throughout the rest of the trading session. Just after Apple's new CEO, Tim Cook, finished the keynote speech and the new major product announcements, shares of the firm fell quickly and closed at $571.17 - nearly 1.58% lower than the previous day's close.
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So Why the Drop?
With the "Apple Indicator" firmly unbroken, it's pretty clear that the company can't seem to please or meet investor expectations. The real question is why? The purpose of the conference isn't to support Apple's stock price, but to display its new products. This year's WWDC featured some impressive advances, including Apple's new Retina monitor, the world's highest-resolution display, as well as updates to Siri and new lighter weight MacBook designs.
Yet, Wall Street seemed unimpressed and sent the stock down. Perhaps it's a continued case of overpromising and under-delivering? Apple is one of the most widely written about companies on the planet, especially when you factor in the firm's high level of secrecy concerning its new products. To that end, speculation dominates when it comes to the WWDC and new hardware/software launches.
This year, rumors about the possible unveiling of the iPhone 5 as well as a 7-inch iPad tablet dominated headlines. Some analysts even postulated that key Apple designer Jony Ive would unveil a 46-inch Apple-powered television set. Therefore, when Apple didn't produce these items and displayed its new "Mountain Lion" operating system instead, it's easy to understand why investors were unmoved. CNBC analyst Bob Pisani, perhaps summed up Wall Street's position the best when he said that many traders thought that Apple's WWDC presentation was fairly underwhelming and "a relative non-event."
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There lies the biggest issue, when it comes to the WWDC. Tech blogger and institutional investor expectations are always raised too high due to the hundreds of false and ambiguous rumors created by the media.
Over the long term, the company has continually impressed and created completely new categories of must-own devices. However, for a few days every summer, it disappoints, as these rumors prove false.
The Bottom Line
For the last 23 years, Apple's Worldwide Developers Conference has served as the company's main new product showcase. However, despite the firm's long-term performance, shares of the company have fallen every year for the last decade at the close of the event. The reason - too much hype surrounding the product announcements. For investors, the best advice could be to wait until after the conference to buy shares.