Apple vs. AT&T: who wins the stock battle?
Back on January 9, 2007 the iPhone was announced. At that time the AT&T stock closed the day at $33.85 per share and Apple closed at $86.45 per share. By January 16, 2007 Apple stock had quickly spiked to $97.10 per share while AT&T only hit $34.32 on that same day. Apple shares then dropped to their pre-iPhone levels until mid February when they began to rise once more.
If you had purchased your Apple stock on January 9 and sold it on January 16 you could have made a quick $10.65 per share or about a 12% profit on your Apple investment. AT&T stock had only gained $0.47 per share during that same time span for a far poorer 1.3% profit.
Not counting the quick gains made within the first week of the iPhone announcement we see that AT&T stock was the better pick. It was not until early May when Apple stock began to hit its major stride and beat the performance of AT&T stock. Though we do remember the Engadget flap in regards to Apple stock the surge began before that. There was the iTunes DRM story that hit early in May, could that have been what set things off?
If we look at May 4, 2007 (the last stock trading day before the DRM news) we see that Apple was at $100.81 per share and AT&T was at $39.48 per share. AT&T had also declared a dividend early on that was paid out at $0.355 per share on April 5, 2007. This means Apple stock gained $14.36 per share while AT&T had gained $5.985 per share. Even though the AT&T gains were only 40% of what Apple gained AT&T shares started out at about 40% of the price of Apple shares.
From here forward Apple shares began a rocket climb, ending at $121.33 on June 4, 2007. AT&T closed at $40.90 on that same day.
All is not just about the iPhone though. AT&T recently changed CEOs and they do more than just sell cell phones! Apples big focus right now is on the iPhone. They should see a stock jump tied to their newest product.
If you look back at these two companies on a five year graph it is very clear that Apple stock has been on a wild ride of great profit. Apple has gained almost 750% in the last five years while AT&T has remained a “steady” stock. If you go back further you will be reminded that AT&T’s graph looks like a nice steady line without a lot of dips while Apple’s stock price looks like a wild roller coaster ride.
Who will out in the long run? I guess that depends on your investment strategy. I had thought (back in January) that AT&T would hit $40 per share by years end, I was pleasantly surprised to see it hit $40 within 6 months. Apple shares? Who can tell. I think it all depends on the iPhone. If the iPhones does well than Apple will do well. If it flops than Apple will be in trouble.
How will an iPhone flop affect AT&T stock? Probably not that much. It may lose a few points but cell phones (or one particular cell phone) is not what AT&T is all about. The same can’t be said for Apple these days. After releasing that flop of a product called the AppleTV and the problems getting Leopard out the door Apple is betting a lot on the iPhone. A phone that is of no interest to business customers and has its greatest appeal to those who can not even afford it is a big thing to gamble on. We’ll just have to wait until the end of June to find out.
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