Apple Struggles After Mixed Earnings
Q4 isn't looking strong enough for the company
Apple managed to beat analyst expectations in their earnings report last night, but 4-straight quarters of declines and a weaker outlook for the holiday season are putting a lot of pressure on the company.
Apple generated a $1.46 EPS from $89.5 billion in revenue, which came out ahead of The Street's expectations. The market was basically looking for any reason to bail on the stock though, because a handful of analysts instantly came out with bearish reports about this earnings call. Apple didn't issue formal guidance for Q4, but simply cautioned that this Q4 is a week shorter than normal and that they would have 'similar' revenue to last year.
THE CHINA PROBLEM
Despite concerns that competition with cheaper alternatives would hurt iPhone sales in China, Apple actually notched a decent amount of growth for iPhone sales there. However, this was a period of bleak growth for Mac and iPad sales, with that weakness especially felt in their China region. After Apple launched new MacBook Pros and other Mac models on Monday night, the company is confident that computer sales will get back on track. More importantly, Apple's high-margin services revenue continues to accelerate, with the company boasting over 1 billion paying subscribers.
WHY IT MATTERS
For now, Apple appears to be continuing along the same line as the rest of big tech by leveling off growth in Q4. With iPhone 15 sales reportedly going 'stronger' than the iPhone 14, the bear sentiment clouding Apple's valuation can dissipate quickly as growth gets back on track. For now though, Apple appears to be in a more volatile period as both Apple stock and the NASDAQ dropped in premarket trading as bears took control of the price action.