Why Apple’s iPhone release could drag the market down next week


Before the widely awaited Apple iPhone launch next Tuesday, some investors worry that the announcement from the largest company in the world could take the wind out of the sails of the market.

“If the demo disappoints … if there really isn’t any great, sexy new application the market gets excited about, there is a very strong potential here that Apple could take the whole market down,” stated Boris Schlossberg, a managing director of foreign exchange management at BK Asset Management, said Friday on CNBC’s ” Trading Nation .”

Indeed, this week, doubts were sown surrounding the yet-to-be-released iPhone, and Apple shares declined more than 3 percent, its worst week since mid-June.

The biggest component in the S&P 500, Apple, was the greatest drag on the index this week. Shares dipped in Thursday trading following a report from the Wall Street Journal that the new iPhone could face issues regarding production. The report suggests that the $1,000 iPhone could see shipping delays.

Schlossberg stated that if the release really disappoints the market, the company’s sheer size and massive weighting could present a burden “not just on itself, but to the rest of the market.” Moreover, the result of such a fall in the stock “could be massive, and could trigger a lot of momentum selling all across the board” upon a tepid release.

The event in and of itself will be a “seminal” event for the tech giant, Schlossberg said, continuing that it needs to “hit a home run to convince investors that they have something very special that they’re going to be rolling out for the Christmas season.”

Gene Munster of Loup Ventures said, during an interview with CNBC’s “Power Lunch” on Tuesday, that shares of Apple could drop 10 percent in the next one to three months, following the iPhone launch.

“The trading history over the past four years is a little bit difficult to look at — just what happens when the product’s announced to three months after,” Munter said on Tuesday.

“But the biggest runups it’s had going into a product cycle would suggest, typically, that you have a tail-off. And I would expect the same thing,” stated Munster, who was formerly a closely watched Apple analyst at Piper Jaffray.

Still, if an investor is a long-term owner of Apple shares, Schlossberg stated, “I still think it’s very much a good play because Apple really does have a tremendous amount of assets under its umbrella. However, if you’re trading this in the short term, and Apple really fails to impress the market, it could be in for a pretty severe correction.”

On Friday, shares of Apple fell nearly 2 percent, its worst session in three weeks.