Apple Inc. ’s stock gained $14bn in market value on Tuesday despite a broad market selloff. This surge in the stock is due to investors’ firm belief that Apple’s latest smartphone will benefit as Samsung’s latest competing device is facing problems.
Apple benefiting from Samsung problems
The Dow Jones industrial average fell by 258.32 points on Tuesday while Apple shares rose by 2.4% on the same day. It was the only stock in the Dow Jones industrial average to do so, while on the Standard & Poor’s 500 it was one of the 16 stocks to rise.
Angelo Zino – an analyst with S&P Global – in a note to clients said, “While (Apple) will not reveal initial iPhone 7 orders, we expect to see robust demand near-term, aided by an aging iPhone installed base and added features that will appeal to many consumers. We believe Samsung Note 7 issues are also contributing to the momentum for the iPhone 7 devices.”
All this is happening due to exploding devices issue that Samsung’s latest device, the Galaxy Note 7, is facing. The issue worsened last Friday, and since then, Apple gained more than $27bn in market value. The Galaxy Note 7 devices are facing the problem of exploding batteries, which led to the recalls.
Late last week, the U.S. Consumer Product Safety Commission issued a warning to stop using the phone. Issues with Samsung’s latest mobile device have worsened leading to a drop in Samsung’s shares. The shares declined by 3% since last Friday, and have fallen by nearly 10% since August 23, 2016.
Strong iPhone 7 pre-order data
Pre-orders for Apple Inc. ’s latest smartphone are strong as per the reports from Sprint and T-Mobile on Tuesday. Both the carriers claim that the pre-orders have gone up by roughly four times from last year, but they did not disclose the actual figures. Amid worsening situation for Samsung, Apple started accepting pre-orders for the iPhone starting Friday.
Apple said last week that it has no plans of releasing the first-weekend preorder sales data, and this made carrier data on the iPhone preorders carry more weight than usual. Sprint said the weekend preorders for the iPhone 7 and iPhone 7 Plus went up by more than 375% from the first three-days of the last iPhone.
Global Securities Research analyst – Trip Chowdhry – said that data from T-Mobile served as the first indication of strong demand for Apple’s new iPhone. “Strength in T-Mobile’s iPhone 7 preorders can be extrapolated to all the carriers worldwide,” the analyst said.
The upbeat sales data distracted the investors from noticing a brief glitch in the iOS10 – Apple Inc. ’s latest mobile operating system. The carrier stocks, however, did not benefit from it, noted Market Watch. T-Mobile shares shed 1.3% and Sprint shares dropped 5.2%.
On Tuesday, Apple shares closed up 2.55% at $108.13. Year to date, the stock is up almost 1% while in the last one-year, it is down over 5%.