Apple Stock Trades 7% Lower from Record High After Earnings with Disappointing iPhone Sales

Consumer electronics giant Apple stock slumped 4.8% Friday after earnings, down 7.1% for the week (largest since November) after $AAPL closed Monday traded at an all-time high $198.23, at that point with a year-to-date return of 51.6%. The company Thursday reported fiscal Q3 Net Income of $19.881 billion, up 2% vs. Q3 2022. Revenues were down slightly year on year. The stock closed the week with a price-to-earnings ratio of 30.59. AAPL reported better than expected EPS and revenue for the fiscal third quarter Thursday. However, with the stock having seen record highs on Monday and a slumping stock market since Apple shares sold off with traders taking the report as pricing the stock to perfection in a riskier environment with higher interest rates.

iPhone 14 and iPhone 14 Plus

Services revenues offset Apple’s usual biggest driver of revenue iPhone sales weak ahead of its traditional September product launch. Excitement is building for the launch of Apple’s AR/VR headset as a new product category for Apple.

Apple (NASDAQ: $AAPL) Reported Earnings After Close Thursday

Apple Fiscal Q3 23 Earnings

Highlights

  • EPS $1.26 up 5% on last year and 7 cents ahead of the Street consensus forecast of $1.19 per share.
  • Revenues fell 1.4% from last year to $81.8 billion, but narrowly beat analysts’ estimates of $81.69 billion.
  • iPhone: Fell 2.5% from last year to $39.67 billion, less than $39.9 billion forecast, China sales rose 1.1% from last year to $15.76 billion.
  • Services: Rose 8.2% to $21.21 billion.
  • Mac: Sales down 7.3% from last year to $6.84 billion
  • iPad: Sales down 19% to $5.8 billion.
  • Wearables, Home, and Accessories: Sales rose 2.5% to $8.28 billion.

iPhone Sales

“We are happy to report that we had an all-time revenue record in Services during the June quarter, driven by over 1 billion paid subscriptions, and we saw continued strength in emerging markets thanks to robust sales of iPhone,” said CEO Tim Cook. “From education to the environment, we are continuing to advance our values, while championing innovation that enriches the lives of our customers and leaves the world better than we found it.”

AAPL Stock Market Reaction

  • $181.99 -9.18 (4.80%) Market Close
  • $181.99 +17.12 (10.38%) past year
  • $181.99 +129.723 (248.19%) past 5 years
  • 52wk High 198.23 (ATH Monday)
  • 52wk Low $123.64

Apple suppliers include SWKS, QRVO, CRUS, AVGO, TSM, QCOM, SMH, LPL, LITE, FNSR, and IIVI. We watch in these companies’ outlook when they report.

Outlook

Apple CFO Luca Maestri said the company expects revenue for the current quarter to be similar to the slight year-over-year decline the company saw in the June quarter.

CEO Tim Cook told analysts the company has continued to see an “uneven” macroeconomic environment. “We continue to see strong results in emerging markets driven by robust sales of iPhone,” he said.

Apple is said to be preparing to enter the AR/VR space with its own headset that will likely launch sometime in 2023. That could serve as the next major product for the company and open up broader opportunities for services and content sales.

On expectations for the Vision Pro headset, Cook declined to forecast revenue but noted he is using it daily and that Apple is seeing an overwhelming response from the developers, reporters and analysts who have tried it out. “We could not be more excited,” he said.

On Apple’s AI work, Cook said Apple has invested broadly in machine learning, generative AI and other technologies and that iOS 18 draws on AI for some of its new features. “We tend to announce things as they come to market,” Cook said. “That’s our M.O. and I’d like to stick to it.”

Source: Apple, AlphaStreet

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