AAPL and VZ had both experienced a run-up leading up to Tuesday’s announcement, meaning that today’s news that Verizon would sell a CMDA iPhone was baked into the price. For instance, Apple’s stock rose from a closing price of $331.29 per share on Wednesday January 5th to a new closing high of $342.46 on Friday (Monday’s trading dropped the price to $340.22), a rise of 3.4% after the Verizon media event was announced.
As more general rumors and leaks pointed to a Verizon iPhone starting in the Fall of 2010, Big Red’s stock took a steady uptick, as well. From November 29th to January 5th, VZ rose from $31.90 to $37.67, a significant gain of 18.1%. Once the company actually announced its media event, profit taking kicked in, but even Monday’s close of $35.92 represented a 12.6% increase from the end of November.
Accordingly, it’s no surprise that once today’s news was finally realized, more investors took profits, sending the stocks lower. Apple ended the day at $341.64, down $0.815 (-0.24%), on strong volume of 15.6 million shares trading hands. VZ ended the day at $35.36, down $0.56 (-1.56%), on heavy volume.
Source: Yahoo! Finance
At the same time, AT&T’s stock had climbed from $27.70 on November 29th to a high of $29.98 on January 5th, a gain of 8.2%. Once Verizon announced its media event, the stock headed South, ending Tuesday’s trading at $27.91, down 0.430 (-1.52%), on heavy volume of more than twice the average, almost erasing two months worth of gains.
German giant Deutsche Telekom, the owner of T-Mobile in the U.S. has been steadily losing value since the beginning of November, and today’s news did little to delight investors. DT ended the day at $12.46, down $0.11 (-0.88%). Shares in Sprint dropped sharply, ending the day at $4.40 per share, down $0.18 (-3.93%).
The long and the short of it is that the near-term upside for Apple and AT&T were already baked into the price, and there were no surprise aspects of what the two companies have so far announced about their deal. At the same time, AT&T losing its exclusive contract with Apple was exactly what investors feared would happen, and confirmation of that fear sent the stock a little lower.
Investors similarly punished T-Mobile parent and Sprint, as it would appear that the Verizon deal means the iPhone will not being appearing at either carrier any time soon.
*In the interest of full disclosure, the author holds a small share in AAPL stock that was not an influence in the creation of this article.