Why did the Apple Wonderlust event wipe out billions in value?

The decline in share prices comes as Apple has already seen significant value wiped from their stock in recent weeks, with over $300 billion lost in value.

Notably, the decline intensified during the much-anticipated "Wonderlust" event, where CEO Tim Cook unveiled the latest products from the company.

Despite finding support at $174.8, which coincided with the pricing reveal for the new iPhone 15 Pro, share prices encountered additional selling pressure and ultimately pulled back to daily lows.

Apple (AAPL) unveiled the latest iPhone, Apple Watch, and AirPods versions at its much-anticipated "Wonderlust" event. While these improvements come at a cost, with the top-tier model, the iPhone 15 Pro Max, retailing for $1,199, they are expected to enhance user experience:

Titanium Siding: While lower-priced iPhones are made with aluminum, Apple's Pro models have long been constructed with surgical steel, making them stronger but heavier. This year's Pros feature a titanium frame that is lighter and more durable. There is also a thinner bezel around the screen.

Improved Cameras: The iPhone 15 Pro and Pro Max are equipped with what Apple claims is the equivalent of seven camera lenses, including a periscope-style telephoto lens that will improve photo quality taken from long distances. The telephoto lens has a 5x optical zoom, an upgrade from its predecessor.

USB-C Charging: Apple is switching to USB-C charging to comply with a mandate European regulators plan to impose in 2024. Users' old Lightning cables will no longer work.

New GPU: The new A17 Pro chip includes a "breakthrough" GPU, a three-nanometer chip likely manufactured by Taiwan Semiconductor. It includes 19 billion transistors and is focused on gaming rather than AI.

Dynamic Island: Basic iPhone 15 models have been redesigned to include a shape-shifting cutout on the display screen that Apple calls its "Dynamic Island" for app notifications, a look introduced with last year's Pro and Pro Max devices.

(1) Leak of crucial information.

Apple's "Wonderlust" event confirmed many of the rumors and leaks surrounding the much-anticipated iPhone 15, resulting in a subdued market reaction. Such as Apple VP Greg Joswiak had previously confirmed that the company would need to comply with the EU's requirements for USB-C charging, and well-sourced insiders had indicated that this year's iPhone 15 would kick off the USB-C iPhone era.

(2) New features? Yes but might not be enough.

As with previous smartphone releases, the four types of iPhone 15 models unveiled by Apple donotfeature major leaps in technology. However, the tech giant has added new features to the top-of-the-line model, the iPhone 15 Pro Max, which has ahigher pricetag of $1,200, representing a 9% increase from last year's version.

Despite featuring a thicker titanium chassis and the new A17 Pro processor, Apple claims that both iPhone models will still have all-day battery life, similar to the iPhone 14 Pro models.

The larger internal volume of the iPhone 15 due to its increased thickness suggests the presence of a bigger battery pack inside. Nevertheless, battery life estimates for the iPhone 15 Pro and 15 Pro Max match those for the iPhone 14 Pro models.

Moreover, Apple has not officially increased the charging speed of iPhone 15 handsets, maintaining the same default 20W charging speed as previous generations.

(3) Competition from South Korea and China.

According to IDC data, Apple currently dominates the premium smartphone market, with seven out of the top ten models in the $800+ segment being from Apple, including the iPhone 14 Pro and ProMax. However, with the recent launch of Samsung's new foldable smartphone models, the more expensive Pro/ProMax iPhone 15 models are expected to face stiffer competition.

The rivalry between Apple and Samsung has been ongoing, with 76% of Apple's smartphone shipments classified as premium compared to 20% of Samsung's. Both brands have shifted their focus towards premium products within their respective portfolios.

Apple has historically dominated China's high-end phone market, particularly after US sanctions limited chip supplies, leading Huawei to abandon plans to make 5G phones. However, the release of the Huawei Mate 60 has the potential to challenge Apple's position by driving more Android users to upgrade to Huawei or iPhone users to switch back.

According to the official Securities Times in China, Huawei has increased its second-half shipment target for the new Mate 60 series smartphone by 20%. This latest offering from the hardware giant features satellite capability and boasts ultrafast data connectivity.

Martin Yang, an analyst at investment firm Oppenheimer, believes that the new Huawei phone could lead to a loss of 10 million iPhone shipments for Apple in 2024. While this figure represents approximately 4.5% of total iPhone shipments, it underscores the impact that Huawei's new offering could have on the smartphone industry.

(4) Global smartphone slowdown.

Apple's latest iPhone launch comes at a sensitive time for the tech giant, as the global smartphone industry has experienced declining sales for two consecutive years. This trend has contributed to several quarters of declining sales for Apple, with the company experiencing its most prolonged sales slowdown in decades, even in key markets such as China.

The market agrees that Apple's decision not to boost product prices like before reflects the industrywide slowdown in smartphone demand.

(5) History repeats itself?

According to Dow Jones Market Data, Apple's shares have fallen by an average of 0.2% on the day of an iPhone announcement. However, the stock has risen by an average of 2.8% between the announcement and the release of the new smartphone, with gains typically accelerating in the months thereafter.

On the actual release day, Apple's stock has historically fallen by an average of 0.4%. While past performance is not necessarily indicative of future results, this data suggests that investors may be more optimistic about the company's growth prospects after they have had time to digest new product releases.