Last Time This Happened Apple Inc. Rose 485%

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By Gaurav S. Iyer, IFC

AAPL Stock Starts Bullish Run

Apple Inc. (NASDAQ:AAPL), the biggest company in the world, hasn’t had this kind of week in over seven years. After investors got a whiff of “iPhone 7” sales, they started clamoring for Apple stock. Within three trading sessions, they added $50.0 billion to AAPL’s market cap.

The gains were extraordinary: AAPL stock climbed 2.2% on Monday, 2.4% on Tuesday, and 3.5% on Wednesday. It was a stunning advance for Apple stock, but also one that contradicted investors’ original reactions to the new iPhone 7.

Just last week, there was a massive sell-off in reaction to the product. (Source: “Apple stock sees best day since July 27 on preorders of iPhone 7,” CNBC, September, 14, 2016.)

Traders pummeled Apple stock the previous Thursday and Friday, costing the share price 2.6% and 2.3%, respectively. They may have continued that trend were it not for bullish talk surrounding pre-orders. Sprint Communications Inc, T-Mobile US Inc, and AT&T Inc. (NYSE:T) all confirmed that iPhone 7 pre-orders were better than expected.

As a result, there were five consecutive days in which Apple stock moved more than two percent. We haven’t seen that kind of volatility since April 2009, after which AAPL stock started a massive bullish run. It skyrocketed by 485% after those five trading sessions, suggesting that we may be on the verge of a similar tipping point.

The gains this week will force many to confront the conventional wisdom on Apple. For months, the narrative was centered on falling iPhone sales. Analysts wrote that Apple had reached maturity, and that it could not possibly grow any bigger. They also suggested the removal of the headphone jack on the iPhone would prove disastrous (hence the initial response to the new iPhone).

But consumers seem motivated to upgrade their iPhones (as the pre-orders suggest), suggesting that Apple stock is not as dead as analysts presumed. The market appears willing to extend them some goodwill for an increase in iPhone sales. Apple could use this moment to push a new slate of products.

For instance, Apple has reportedly been working on a Netflix-style streaming platform. The rumors reached a fever pitch this week when they hired Peter Stern, a veteran executive from Time Warner Cable Inc. (NYSE:TWC). Stern’s hiring is perceived as an obvious sign that Apple wants to finalize its content deals.

Some analysts are now hopeful that an “Apple TV” service could help keep up the momentum in AAPL stock. If history is any guide, this much volatility in Apple stock promises triple-digit gains for shareholders.