Is Apple Stock Fairly Priced Before BIG iPhone 5 Announcement?

Apple (NASDAQ:AAPL) recently distributed invitations to an event scheduled for Wednesday in San Francisco. The invitation read, “It’s almost here” and displayed a large shadow of the number 5, dropping a rather large hint that the conference is the launch of the highly anticipated iPhone 5. Considering how the tech giant’s stock traded earlier this week, the unveiling of the new iPhone makes perfect sense.

Speculation has been building up over the past few months about the next iPhone release from Apple. Supply sources and analyst checks indicated that a new model from the company was destined for a September or October launch. Interestingly, Apple’s stock performance seems to take a small hit leading up to an iPhone product announcement.

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When the iPhone 4S was unveiled last year, Apple shares declined 6.7 percent in the five days prior to the announcement. Investors also sold five days leading into the iPhone 3G and iPhone 4 announcements by 2.4 percent and 5.9 percent, respectively. The iPhone 3GS managed to avoid a pullback before its announcement, but shares fell 5.4 percent in the five days thereafter. The original iPhone announcement in 2007 was the only version to see Apple shares rise before and after the event, as it was the company’s first venture into the smartphone market.

The graphic below from Fortune details the performance of Apple shares before and after an iPhone announcement.

On Monday, shares of Apple fell 2.6 percent to close at $662.74, despite hitting another new all-time high at $683.29 earlier in the day. Apple shares also ticked slightly lower on Tuesday to finish at $660.59. While Apple shares typically suffer a pullback around iPhone announcements, it does not hinder long-term performance. Shares have jumped more than 60 percent year-to-date, and almost 250 percent over the past five years. In August, Apple became the most valuable company in history, surpassing Microsoft’s (NASDAQ:MSFT) market value peak during the tech bubble.

If the iPhone 5 lives up to expectations, then Apple shares are set for another strong rally. Piper Jaffray analyst Gene Munster believes Apple could sell between six and ten million iPhone 5 units just in the final week of September, depending on supply issues. He also expects iPhone 5 sales to hit between 26 million and 28 million units in 2012.

Many of Apple’s rivals are also gearing up for the holiday season with new gadgets. Nokia (NYSE:NOK) and Microsoft recently launched the next line of Lumia smartphones, while Google’s (NASDAQ:GOOG) Motorola unit unveiled three new Droid Razrs. Amazon (NASDAQ:AMZN), also held an event in California last week that introduced a new line up of Kindle Fires.

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