On Tuesday Verizon will make big announcement and everyone is on pins and needles about what it could be. Not really. This should not be breaking news, but the iPhone is coming to Verizon. Link. While the major players this announcement affects may see some movement in their stock prices, fortunes will not be made on Tuesday. The market has already accounted for the impact of this partnership.
The iPhone’s presence at Verizon is a huge deal. Any competitive advantage AT&T had is quickly vanishing. Despite being the most unreliable major cell phone carrier, AT&T always had the iPhone. Not only does the iPhone strengthen Verizon’s market position in relation to AT&T, it leaves Sprint, T-Mobile and other carriers at a significant disadvantage. The deal’s impact even stretches to Silicon Valley. Google’s Droid and Android’s competitive positions had been based in large part on AT&T’s exclusive hold on the iPhone. Those dynamics are gone.
While all these changes are coming, the market has already accounted for most of them. It has been anticipated for some time that Verizon would get the iPhone. As time passed and the likelihood of the partnership increased, the market slowly absorbed its impact. The announcement of the Tuesday’s press conference finally established a definite timetable and may have been the last big splash. Apple stands to benefit the most and saw a 0.72% jump on Friday. It may not seem very impressive, but with a market cap over $300 billion that is a jump of $2.19 billion. AT&T has the most to lose and saw a 1.03% drop, or $1.78 billion hit to its $170+ billion market cap. All this movement and Verizon has yet to make the official announcement.
In terms of the efficient market hypothesis, what does this mean? Can we actually say that the iPhone/Verizon partnership is public information? If so, the semi-strong form applies. However, the announcement has not yet been made. While the market strongly expects the iPhone's arrival at Verizon, Verizon has yet to make it official. Although this seems to support strong-form efficiency where all information, public or private, is incorporated into a company’s stock price, the nature of this information seems to reside in a gray area between public and private.
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Monday was even bigger than Friday. Apple went up another 1.88% ($5.8 billion) and AT&T went down anther 1.77% ($3 billion). Verizon is still holding steady. We'll see what happens tomorrow.
ReplyDeleteToday was the day and Verizon will start selling the iPhone 4 on February 10. Something about the announcement did not go over well as Verizon fell 1.56% ($1.6 billion) and Apple fell 0.24% ($743 million). AT&T continues to hemorrhage, falling another 1.52% ($2.5 billion).
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