Apple Stock Under Pressure After Earnings: What You Need to Know
Friday, Nov 1, 2024 9:57 am ET
1min read Apple's recent earnings report has left investors with mixed feelings, as the tech giant's stock price took a hit following the release. Despite posting quarterly revenue of $94.9 billion, up 6% year-over-year, and quarterly diluted earnings per share (EPS) of $0.97, Apple's stock price fell 6% in the aftermath. Here's what you need to know about Apple's earnings and the subsequent market reaction.
1. **Revenue and EPS Miss Expectations**: While Apple's revenue and EPS grew year-over-year, they fell short of market expectations. Analysts had forecasted revenue of $96.2 billion and EPS of $1.02. The miss in earnings was primarily due to a one-time charge related to the reversal of the European General Court's State Aid decision.
2. **iPhone Sales Decline**: Apple's iPhone sales, which account for roughly 50% of total revenue, declined 2.4% year-over-year in the June quarter. This weakness, coupled with a 1% YoY drop in overall revenue, led to analyst downgrades and a sell-off in Apple stock.
3. **Services Revenue Growth**: Despite the hardware underperformance, Apple's services segment continues to grow, with revenues up 8% year-over-year in the June quarter. Services now account for 21% of total revenue and are expected to continue growing as users engage more with Apple's ecosystem.
4. **Guidance Disappoints**: Apple's guidance for the September quarter was also disappointing, with expected revenue of $80-84 billion, below the $87.1 billion consensus estimate. This cautious outlook contributed to the post-earnings stock price drop.
5. **Analyst Reactions**: Following the earnings release, some analysts downgraded their recommendations for Apple. Rosenblatt analysts downgraded Apple's shares to 'neutral' from 'buy,' citing a 'slowdown phase,' while Loop Capital analyst Ananda Baruah lowered his rating to 'hold' from 'buy,' expressing concerns about Apple's current revenue guidance. However, many analysts, such as Wedbush tech analyst Dan Ives, maintained a bullish outlook, reiterating their 'outperform' rating and a $220 price target.
In conclusion, Apple's earnings report highlighted the company's ongoing struggles with iPhone sales and the impact of a one-time charge on EPS. Despite these challenges, Apple's services segment continues to grow, and analysts remain optimistic about the company's long-term growth prospects. As investors digest the earnings results, they should consider Apple's diverse business model, strong brand loyalty, and the potential for a "mini super cycle" driven by the upcoming iPhone 15 release.
1. **Revenue and EPS Miss Expectations**: While Apple's revenue and EPS grew year-over-year, they fell short of market expectations. Analysts had forecasted revenue of $96.2 billion and EPS of $1.02. The miss in earnings was primarily due to a one-time charge related to the reversal of the European General Court's State Aid decision.
2. **iPhone Sales Decline**: Apple's iPhone sales, which account for roughly 50% of total revenue, declined 2.4% year-over-year in the June quarter. This weakness, coupled with a 1% YoY drop in overall revenue, led to analyst downgrades and a sell-off in Apple stock.
3. **Services Revenue Growth**: Despite the hardware underperformance, Apple's services segment continues to grow, with revenues up 8% year-over-year in the June quarter. Services now account for 21% of total revenue and are expected to continue growing as users engage more with Apple's ecosystem.
4. **Guidance Disappoints**: Apple's guidance for the September quarter was also disappointing, with expected revenue of $80-84 billion, below the $87.1 billion consensus estimate. This cautious outlook contributed to the post-earnings stock price drop.
5. **Analyst Reactions**: Following the earnings release, some analysts downgraded their recommendations for Apple. Rosenblatt analysts downgraded Apple's shares to 'neutral' from 'buy,' citing a 'slowdown phase,' while Loop Capital analyst Ananda Baruah lowered his rating to 'hold' from 'buy,' expressing concerns about Apple's current revenue guidance. However, many analysts, such as Wedbush tech analyst Dan Ives, maintained a bullish outlook, reiterating their 'outperform' rating and a $220 price target.
In conclusion, Apple's earnings report highlighted the company's ongoing struggles with iPhone sales and the impact of a one-time charge on EPS. Despite these challenges, Apple's services segment continues to grow, and analysts remain optimistic about the company's long-term growth prospects. As investors digest the earnings results, they should consider Apple's diverse business model, strong brand loyalty, and the potential for a "mini super cycle" driven by the upcoming iPhone 15 release.
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