How Does Apple Stock Respond To WWDC?

Apple Inc AAPL enthusiasts are giddy this week as the company hosts its annual Worldwide Developers Conference (WWDC) in San Francisco. While techies await news of the latest developments in Apple’s cutting-edge product evolution, Apple shareholders are watching the ticker and hoping that this year proves an exception to the general rule that Apple’s stock tends to under-perform during WWDC.

The numbers
During the past 10 years, Apple’s stock has dramatically fallen during the week of WWDC. In fact, the stock is averaging a decline of 3.7 percent during the last 10 WWDC weeks. This underperformance is not simply a case of bad timing either: Apple’s stock has lagged the S&P 500 by an average of 4.0 percent during these periods, according to USA Today.

Reason for hope?
Incredibly, Apple’s stock has fallen nine out of the last ten WWDC weeks. However, Apple shareholders’ hopes for this week ride on the fact that the lone exception to the rule in the past 10 years was last year, when Apple’s stock gained 2.0 percent during WWDC week. Whether last year represents a change in trend or is simply an outlier remains to be seen. So far this week, Apple is off to a slow start, down 0.4 percent in early trading on Monday.

Why the under-performance?
Investors that are puzzled about Apple’s WWDC sell-offs should consider the high expectations and excitement that typically surround the event. When expectations are extremely high that a new revolutionary technology could be right around the corner, the market’s expectations are set so high that it is nearly impossible to meet or exceed them. That phenomenon tends to set the stock up for a “sell-the-news” reaction to the conference, no matter how great the updates and innovations announced during the conference may be.