Len Edgerly, on the 80th episode of his podcast, was musing on Wall Street reacted to Steve Jobs' announcement of the iPad. I wanted to offer my own analysis of both Amazon and Apple's stock price on the day.
Before I start, though, I must issue a disclaimer. I own neither Amazon or Apple stock. I do own a 1st edition Kindle and an iPod Touch, along with a Macbook Pro. Neither stock is in my team's portfolio and I don't analyse either.
First, Amazon, which according to Google Finance, was up almost 3%. The next day, it was to announce quarterly earnings, which were up 71% year-over-year. Earnings periods traditionally feature a run-up before the announcement with a drop following it. So I'm thinking that a large part of the gain is the pre-earnings runup and not due to this announcement. Given that the previous quarter earnings report featured a 1% gain in the price and gain of just under 3% in the final day of the year on year quarter from last year (4Q, 2008). Again, approximately the same amount. So I'm tempted to conclude that the effect of the iPad on Amazon's stock was negligible.
Now we'll examine Apple, which was up approximately 1.1% on January 24. Apple's earnings aren't due till March, so the earnings impact can be assumed to be nonexistent. It wasn't triple-witching either, nor were options expiring and 1% up or down is not that big a move. An hour-by-hour examination of the stock chart shows that it shot up approximately 2% the minute that Steve Jobs announced the iPad, before resuming its normal pattern, of tracking the market index.
I'm tempted to conclude that traders do not think the iPad is going to threaten Amazon very much, at least at first glance. What would be a more interesting study to conduct is what happens when the iPad with 3G actually ships in April, just in time for Apple's earnings.
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