Why Apple’s Stock Dropped So Soon After the iPhone 7 Was Announced

Nothing can dominate the tech world’s conversation quite like a big Apple event. And sure enough, this week’s announcement of the iPhone 7 has spawned several discussions: Shutterbugs liked the phone’s new camera. Nintendo fans rejoiced at Super Mario’s arrival on the iPhone. Music lovers huffed over Apple’s insistence on killing the beloved headphone jack.

Then there’s the constituency that’s been giving Apple grief for the past year: its investors. Apple’s stock has lost a fifth of its value since reaching $132 a share in 2015 as stockholders became focused on one primary concern: Has the iPhone, which accounts for nearly two thirds of Apple’s revenue, hit peak popularity?

During Wednesday’s announcement, Apple’s stock ticked slowly but steadily upward as executives unveiled feature after feature that may just entice customers new and old into springing for the latest version rather than holding onto their existing phones, as they seem increasingly wont to do. On balance the iPhone 7 and 7 Plus seemed to bode well for Apple’s outlook.

Then came another announcement Thursday morning, one with far less fanfare, that undid all of Apple’s hard work in creating the iPhone 7 and choreographing the hyped-up keynote: Apple said it won’t release the first-weekend sales figures of the iPhone 7, ending a long tradition that frequently pushed up the stock price. In fact, it says won’t be releasing first-weekend sales figures any longer, period.

“In years past, we’ve announced how many new iPhones had been sold as of the first weekend following launch,” Apple said in a statement. “But as we have expanded our distribution through carriers and resellers to hundreds of thousands of locations around the world, we are now at a point where we know before taking the first customer pre-order that we will sell out of iPhone 7.”

Apple said it expects the new phones will be “incredibly popular” – the kind of vagueness that infuriates metric-obsessed analysts. It also reiterated its guidance for the current quarter. It’s also worth recalling that Apple recently increased by 10% its orders of parts and components from suppliers.

But Apple’s explanation for the move remains unsatisfying. Apple’s statement said initial sales are “governed by supply, not demand” — that is, demand for iPhones is strong enough that any limits on sales will come solely because of limitations on how many phones Apple can produce. But that’s not new for Apple, and it’s not a good reason for shutting off a closely watched metric. Apple didn’t respond to a request to further clarify its announcement.

The news not only erased any gains Apple posted on the back of Wednesday’s iPhone 7 unveiling, it sent the stock down nearly 3% Thursday, reducing the company’s market value by $15.4 billion in a single day. Rather than shrugging off the news and taking Apple at its word, many observers interpreted it as an awkward attempt to conceal a potential weakness. If anything, it heightened the concern that Apple, still the world’s most valuable company, is struggling to maintain the iPhone’s popularity.

With one simple announcement, Apple managed to strip the shine from the keynote that introduced the iPhone 7 to the world. Two years ago, the unveiling of the iPhone 6 pushed away skepticism that Apple’s best years were behind it. That skepticism returned in recent months, and right now it’s not clear Apple can push its phone sales, and its stock price, to new heights.

The debate between Apple bulls and bears will continue at least through Apple’s next quarterly earnings report. That argument is much quieter, but perhaps more important, than the one over Apple’s decision to remove the 3.5mm headphone jack from iPhones. Apple made another awkward attempt to diffuse the headphone debate by somewhat bizarrely explaining it this way: “It comes down to one word: Courage.”

That statement, which came by way of Apple marketing boss Phil Schiller, prompted a wave of eye-rolling around the Internet. And it’s not helping Apple that, one day after the iPhone’s introduction, the company’s decision to withhold sales figures is not exactly a profile in corporate courage.