Koshiro Kiyota / iStock.com

There are a number of catalysts that could send stocks skyrocketing or plummeting, and one of them is product launches. A company that consistently moves the market with its product releases is Apple.

The consumer electronics tech giant’s annual product releases aren’t just tech events. They’re market-moving moments that not only trigger Apple’s stock price but the entire industry.

So, is Apple stock a buy ahead of major product launches?

You’ve probably heard the phrase “buy the rumor, sell the news.” This means buying a stock in anticipation of a major event that could drive prices up and selling when the news goes public, often at a profit.

Apple is a great example of this phenomenon. Leading to major product launches, speculation is high: Analysts release bold forecasts, hedge fund managers start to increase their positions — all of this often skyrockets Apple’s stock price before the actual launch.

“Whenever there’s a product launch or some upcoming news, a big news catalyst that everyone knows about, you’ve got to buy significantly ahead of the news,” said David Capablanca, founder of The Friendly Bear University. “Because when the product comes out, the stock price is already baked in. Everyone already loaded up before the product launch, and then the launch itself becomes what they call a ‘sell the news’ event.”

History repeats itself. So, don’t wait until Apple launches its new products to buy the stock. Buy the rumor and ride pre-launch momentum.

Every time Apple is about to release a new product, its valuation goes up. Why? Investors and hedge fund managers jump in to buy the stock. As more people buy, Apple’s stock price goes up, and so does its valuation. 

“If you are willing to hold the stock for a longer period, buying prior to a major product launch has proven successful in the past,” said John Foard, chief compliance officer and co-founder of Crown Advisors. “If you look at the history of the stock price over time, the typical scenario is a run up in share price prior to the product launch, an underperformance or dip after the launch, and then an average of more than 10% in gains over the six months following the launch.”

Apple is more than a tech company. It has a brand loyalty that locks in customers like no other. For this reason, every major product launch leads to cross-product sales. A new iPhone drives demand for a new watch, AirPods or MacBook.

“Apple owns its customers. You buy the phone, then you pay for storage. Then you get the watch. Then the headphones. The lock-in is totally brutal,” said David Materazzi, CEO and founder of Galileo FX. “People don’t leave. They adapt to whatever Apple makes next. That’s the real launch, one that happens quietly every day, in the background, every time someone buys into the system.”