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What Was A Better Buy: Apple Stock or the Original iPhone?

Over the past decade, Apple’s stock has been an investor’s dream come true.

Since the debut of the first iPhone, on June 29, 2007, shares of the tech giant have blisteringly outpaced the wider stock market, rising an enviable 744% over a decade as the iPhone and its successors gradually took over the smartphone market. Today, as shoppers await the release of the 10th anniversary version of the phone, it seems like a no-brainer that buying the stock at that date would have been a great investment.

But surprisingly enough, it might have been smarter for an investor to buy the first iPhone, rather than buying Apple’s stock—provided they had the willpower not to actually use it, or even open it.

Back then, the first generation iPhone 8GB 2G sold at retail for $600. Let’s say a frugal investor, balking at the price tag, decided against the shiny new purchase, and instead invested that money in Apple’s stock, predicting that the product would gain a massive loyal following in years to come. That $600 would’ve turned into $5,598 over the course of ten years, counting the stock’s soaring rise and, in more recent years, its generous dividends.

By most measures, that would’ve been a great call. In the same period, the wider market as measured by the S&P 500 index gained only 62%. (Blame the steep recession of 2007-09 for much of that weak result.) In dollar terms, a $600 investment would have turned into $972.

But as the iPhone grew in popularity due to its functionality, Apple also developed a following akin to a cult, based on some accounts. And that fervor, in some cases, has made the phone itself even more valuable.

At least one eBay buyer purchased a mint condition original iPhone for $5,850 last year—implying a gain of 875% on the iPhone’s original retail price. This week, some eBay sellers are hoping that the love of all things Apple is even greater than that, with one asking for $12,000, and another $19,500—gains of 1,900% and 3,150% respectively if they manage to make a sale.

“Own a piece of technology history with this first generation Apple iPhone,” the description on both declares. “This is the Apple device that started it all.”

What these devices all have in common, of course, is that they’re “factory sealed” and never used. A used original iPhone would mostly be a headache today, especially since its operating system and memory wouldn’t keep up with today’s apps and data demands.

Bigger payoff, but a long-shot bet

So based on that small sample size, the value of sentiment, it seems, outstripped the value of corporate profits over the past 10 years.

But that doesn’t mean investors should go out and buy an iPhone 8 when that hits, in the hopes of spectacular returns 10 years down the line. For one thing, subsequent iPhone releases don’t have the cult cachet of the original. When first released, the iPhone 3G 8GB, the second edition of the phone, retailed for $399. On eBay today, some retailers are asking for at least $895 for an unopened version of the phone, and one asking for $10,000 for the 16GB version of the device, which first retailed for $499.

Newer iPhone models, however, lose this collector’s premium. A 2010 iPhone 4 8GB, for instance, sold this week at $100 on eBay. The more recent releases feel more like an outdated mode of technology than a significant piece of history.

And of course, like all collectibles, rare iPhones lack the liquidity, and the predictability, of a stock. Buying $134,000 worth of Apple stock on the iPhone’s 2007 release date would have given you a stake worth $1 million today; buying $134,000 worth of iPhones in 2007 and storing those 233 devices in mint condition for ten years would have given you a logistical headache and no sure thing where returns are concerned.

Demand for even the first generation iPhone today is weak and unpredictable. For example, at least one mint condition first generation iPhone, offered on eBay at $4,000, has been online for 20 days so far with no takers.

Moreover, when factoring in other benefits of owning a stock, such as dividends, Apple’s total returns shores up to be about 833% over the past decade—not too shabby at all.

That said, it still pales in comparison to some others on the S&P 500. Since Apple first introduced its first iPhone, shares of Amazon have jumped 1,333% as the e-commerce giant took over all aspects of retail, while Netflix soared 5,340% as its streaming service cut into traditional cable.