Why did Apple’s share price shed $40 after posting all-time record earnings?

“When a company like Apple announces record profit for a quarter and its share price immediately plummets by as much as 9%, it’s easy to get confused,” Zach Epstein writes for BGR. “What sense could that possibly make?”

“Apple managed a gargantuan $13.1 billion profit on sales that totaled $57.6 billion last quarter. It sold more iPhones than it ever has before. It sold more iPad tablets than it ever has before,” Epstein writes. “Mac sales actually grew year-on-year while the rest of the PC industry is free-falling. So, what the heck is going on here?”

“It boils down to a single sentence: Investors care about the future, not the past,” Epstein writes. “A company’s performance each quarter is important, but far more important to investors is the picture of the future painted by a company’s performance and by its guidance for the current quarter… While 51 million iPhones is a massive number, the rate at which iPhone sales are growing has slowed substantially. Growth, of course, is key.”

Read more in the full article here.

MacDailyNews Take: If you think Apple is under pressure now, you haven’t seen anything yet. Until “it” is, or “they” are, revealed, nothing will alleviate the weight on Cook & Co.’s shoulders.

43 Comments

        1. Everybody relax.
          I have been watching Apple since the ’90s and this happens at every single earnings report. When Apple reports good earnings, stock goes down. Has been this way for 20 years! Walstreet does not understand Apple and it appears they never will. These are just buy opportunities if you ask me.

    1. If I was a new arrival from planet Zorg, then I would be easily confused.
      At planet Zorg, all investors are issued with a crystal ball to enable them to see into the future, this enables them to invest in only future profitable companies. We in Zorg have eliminated slow growth business’s as a result, there are no declining markets as they are snuffed before they can decline.
      Why do Earthlings tolerate declining PC markets? Simple, Earthlings are not issued Crystal balls upon their first investment.
      Until Earthlings can see into the future as well as they can then past, Zorgans will always be superior to Earthlings. HAIL THE MIGHTY ZOGLLAR better than the Dollar! 🙂

    2. Meanwhile in a parallel universe:
      “I bet it would take longer to literally flush $9.5 billion in cash down a toilet than it took for Google to do so figuratively on the Motorola acquisition.”

    1. And iBeacon technology on a wrist-worn device will seriously disrupt interaction design, connecting digital content to the physical world and providing context-based experiences to its users.

  1. A lot of it is stock manipulation. Apple’s stock seems to be the easiest to manipulate. For about the last 5-10 years,
    if you had followed the pattern of selling your stock right before earnings and then buying it back a few days later, you would be a rich man now…

    1. For the last few years I’ve been selling AAPL just before announcements and then buying more of them back again at a cheaper price a few days or weeks later.

      It’s a strategy that has produced much greater gains than my other AAPL shares, which I bought a long time ago and held. The actively traded shares have taken advantage of the ups and down of AAPL, most of which were rather predictable.

  2. Once upon a time, we took in an outdoor cat. That cat, from always having to find (hunt) his food, was ALWAYS at his food bowl and eating everything he could, fearing that he may be without food. Didn’t matter that he had an overabundance of food at his disposal for YEARS after we brought him into the house.

    People, when it comes to Apple, are the same thing as that cat. Once upon a time, Apple was actually doomed (or close to it). Doesn’t matter how much of an ecosystem they have, or the fact that they are (or were) worth more than Exxon/Mobil, or that they are currently worth MORE than Microsoft, the slightest perceived problem and the panic happens.

    In closing, I think I just called everybody pussies (and I only just realized it as I was writing my closing statement). 😛

    1. Great analogy. 🙂

      I think a vast majority of these investors are from the other side of the fence. They don’t try understand Apple. I couldn’t imagine thinking that a Windows computer is “great, amazing, superior” but so many people do. It’s a different side of the coin. People see things differently from us. We see Apple’s amazing passion, performance and steady perseverance. They see … I don’t really know what they see.

      I wish Apple would go private. This stock market BS is so tiring.

  3. There are two kinds of analysts casting FUD about Apple.

    1) Those who don’t understand the nature of innovation, including the importance of Apple’s move to a 64-bit operating system and improved CPUs on their recently introduced mobile devices.

    2) Those who deliberately try to manipulate the share price.

    Unfortunately, roughly 100% of analysts fall into one or both classes. They are the ones that lack credibility.

    I look at a number of financial analysts’ newsletters, which often recommend investment moves. Were i to follow those recommendations, I wouldn’t have any investment accounts.

  4. “Until “it” is, or “they” are, revealed, nothing will alleviate the weight on Cook & Co.’s shoulders.”

    And the same class of halfwit that doesn’t understand Apple now won’t understand Apple then either and they will under just as much ” pressure” then as now.

  5. Apple’s guidance has been very conservative since at least the early 2000’s when I started paying attention. That should qualify as a trend worth noting.

    Here’s my advice . . . If you want to catch Apple on the upswing then buy shares about three days after a major product announcement (such as the first iPhone). And then buy some more about 3 months after said product’s launch.

    When the next big thing (iWatch perhaps) is announced, the stock will take a little hit as tech writers and analysts acknowledge its novelty but rip it on some “basic” features it lacks . . . so the stock will actually drop a little right after the announcement, which is a buying opportunity.

    Then, after the initial few million are sold the stock will dip again as people digest just how big of a deal it is. Another buying opportunity.

    Then, when it becomes apparent to even the slowest investors out there that a whole new product category has truly been birthed and other companies are still racing to warm up their copiers, ride that wonderful Apple horse all the way $800 (just be sure to know that within a year Wall Street and its ilk will be driving down Apple’s stock at every chance so it can ride the next one back up).

  6. Wall-Nut-Street has not been right about very much. They didn’t predict the Great Depression nor the most recent Great Recession. When is come to predicting the future of Apple, their predictions are almost laughable.

  7. Anal-ists excuses, it comes down to nothing is ever good enough when it comes to what Apple does. Even record profits while all the other supposed big companies that have plenty of marketshare with NO profits go to $1000 a share. Apple never announces the future and never will so this B.S. is just that B.S.

  8. Apple needs to downsize their Stock. Wall street doesn’t like Apple Stock. They like Apple options. They like selling calls and then controlling the price so that the majority expire worthless and they keep the premium. The current Apple stock price allows shorting to run the price down to the desired Strike price every single Friday in the endless, every week, Options expiration. Everything about Apple Stock is contrived. This huge sell off in the face of great earnings is engineered by the big boys looking for something to drive it down. This time it was the number of iPhones sold, It was not the revenue, which was up. If the stock was split say 10 for 1, then Options profits would not control the stock price. Young people would buy the stock, and the Apple Bears would need to find another stock to manipulate. I hope that Apple’s board or Tim Cook would read this post and acting ASAP.

  9. So let me get this straight. GOOG loses over $7 billion on the Motorola fiasco and their stock goes up…meanwhile Apple has an all-time record quarterly profit of $13.1 billion and their stock drops $50 a share. Tell me Wall Street isn’t a total f-ed up mess.

  10. Wrong. Growth is merely nice. “The Key” is not growth, but profitability. That is, after all, why there is a business. EPS, etc., is nice. But no one ever mentions “Key” measurements, like ROI (Return On Investment).

    The problem is not with Apple, but with Wall Street. In spite of all the jargon and rhetoric, the Stock Market has little to do with ‘investments’ any more. Rather, I t’s all about ‘trading’. And those who trade are lemmings. They aren’t really watching Apple or any other company. They are watching each other. They learned early that whether buying or selling, the only way to make money is to be among the first to do so. So when there’s a big noise, somewhere, everybody runs — and the winner is the first one to do so. Sheep.

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