Apple stock collapses in after hours trading

“Apple’s holiday season proved to be a letdown, even though the company sold a record number of iPhones and iPads during its latest quarter,” Michael Liedtke reports for The Associated Press.

“The results released Monday further crystalized the challenges facing Apple as the world’s most valuable company struggles to lift its stock back to where it stood in September 2012. That was before investors began to fret about fiercer competition in mobile devices and the lack of a breakthrough product since the iPad came out nearly four years ago,” Liedtke reports. “Apple’s management amplified those concerns with a revenue forecast that fell below analysts’ predictions for the current quarter. The cautious outlook is likely to feed perceptions that Apple expects to lose more ground to competing devices running Google Inc.’s Android software.”

MacDailyNews Take: Among those afflicted with morbid idiocy.

“Apple’s stock to shed $45.45, or more than 8 percent, to $505.05 in extended trading after the release of results,” Liedtke reports. “By most measures, Apple Inc. had its best quarter during its fiscal first quarter, which ended Dec. 28. Besides hitting new quarterly highs for the sales of its most popular products, Apple also delivered earnings that exceeded analyst projections. It also produced the highest quarterly revenue in its 38-year history… The Cupertino, Calif., company sold 51 million iPhones during the three months ending Dec. 28. That marked a 7 percent increase from the previous sales record of nearly 48 million iPhones set a year earlier. Analysts, though, were expecting even bigger things and had predicted about 55 million iPhones in what is traditionally the company’s best quarter.”

Read more in the full article here.

MacDailyNews Take: When the stupid panic, opportunity blooms.

Related articles:
MacDailyNews presents live notes from Apple’s Q114 Conference Call – January 27, 2014
Apple beats Street with record quarterly revenue, record iPhone and iPad unit sales – January 27, 2014

62 Comments

  1. This is from The Street of Jim Cramer.

    “”iPad Christmas” Helps Apple Beat Street, Q2 Guidance a Grinch”.

    However, AAPL tanked after hour, strange totally strange.

      1. Yes I think flat profit was probably the most disappointing from the investors point of view. Fact is though only fools could imagine that competition in a maturing market isn’t going to affect profits as compared to when they had the market mostly to themselves. The Android market increases yet who is making money out of it, even Samsung is struggling now and cheap producers will eat into their share so that no one makes very much. That’s the alternative for anyone who fails to see the underlying strength in Apples position.

        If I criticise anything it’s that because of the pressure on growing present businesses Apple needs to monetise other aspects of them a little better, while we wait for an entirely new product line which will come in its own time but won’t be the main expectation of the company in the future I feel.

      2. Samdung misses earnings by billions and has even lower future projections but their stock shed nearly as much. Go figure.

        I guess making billions upon billions alone is not good enough. Funny, Amazon making no money is just fine and their stock skyrockets.

      3. Apple now books unearned revenue because it gives away IOS and OSX updates now. Since it has future expenses associated with maintaining and updating te software over the expected life of the phone, it holds back revenue recognition. I believe PO mentioned $11 billion on the books which will start flowing through to revenue 2nd half of the year. Need to recheck the conference call transcript for the exact numbers.

    1. After hours trading is not a good indicator for what happens the next day in the regular session. Because trading volume is limited, significant interest in one direction can have a more pronounced effect on the share price.

      My bet is that by the end of regular trading hours tomorrow, AAPL price will be +/- $10 of today’s close.

        1. Don’t let your dislike of Icahn cloud your judgement. If AAPL actually opens at around $500 and stays there (instead of accounting for the irrational low volume after hours trading and popping back up once full volume trading resumes), Apple SHOULD consider buying back more stock immediately. Not because Icahn said so, but because it’s a smart move…

          The purpose of stock buyback is to take shares off the market, to make my shares represent a larger portion of the company. That’s a good thing for all AAPL investors, not just Icahn, especially long-term investors like me. When AAPL share price goes significantly lower, using a given amount of cash for the buyback has greater impact.

        1. Today’s close is $550.50 (+4.43). All the downward movement was in after hours trading, which is not a good indicator of the next day’s trading, because the actions of “irrational” traders are magnified due to low volume. I’d hate to be the moron who put in the order to sell after hours thinking $550, and got $505 instead.

          That’s why most large corporations announce their quarterly numbers AFTER the close of trading, to allow the impact of the results (good or bad) to be fully “digested” before the start of FULL trading the next day.

          1. Unfortunately there were s heap of calls at many strikes and not many puts. The market makers who wrote those calls make a fortune by tanking the stock. It wasn’t the average joe or the mutual funds selling in the after hours, it was the robber barons of Wall Street. I hope Tim cones up with the super bowl surprise. If it is a new category,it will now severely impact current sales.

            1. Well, the “robber barons” may have started the selling, but it was the naive “other investors” who kept it going, resulting in a drop of $45+ (ALL in after hours trading). They are the ones who stupidly sold at $505, in a “panic,” because they figured the drop would continue in full trading the next day, and they had to get out NOW!

              In fact, what will probably happen is that those same “robber barons” will pile back in at the open, and make AAPL go back up significantly within the first few minutes of trading. And those same naive fools will see the mistake they made when they panicked yesterday, and try to buy back in, sending AAPL back up even closer where it was at the official end of trading yesterday.

              Meanwhile, the sensible long-term AAPL investors sit back and chuckle. You see, even with the manipulation going on (in both directions), it does not really matter in the long term. Why? Because the LOWS keep getting HIGHER. Just a few years ago, AAPL dipped from above $200 to below $80 during a financial crisis. Remember that? But even $80 was a huge GAIN compared to the ultimate AAPL low about ten years earlier (something like $4). Even more recently, everyone was moaning because AAPL steadily dropped from over $700 to under $400. But $400 is a huge GAIN just a few years after $80. And now, much less than one year after “under $400,” AAPL is over $500.

              A few years from now, the memory-challenged will AGAIN be moaning because AAPL has dipped below $1000. And I’ll be rolling my eyes… 🙂

          2. My comment was actually regarding the close of after-hours trading, not regular trading hours. Regardless, Tuesday won’t be kind to AAPL. And the prospect of it going higher is unlikely. Also, all companies do not release earnings after hours. Just so you understand the mechanics of the stock market.

  2. Two thoughts on the analysts projections:

    1. Either they missed by being overly optimistic, fed by inaccurate rumors. The analysts did a poor job of factoring in variables. Yet it’s Apple that gets punished, not the inaccurate analysts. Go figure.

    2. Or, the high projections were deliberate, giving analysts a method to slam the stock, causing the little guy to panic and sell. That creates an opportunity for options traders and big Wall Street institutions to buy Apple stock on the cheap, knowing that it will rise in the next few weeks. Rinse and repeat.

    Either way, the individual investor must be patient and ride out the short term mismatch on Apple’s real valuation. If you do, and reinvest your dividends, over time, you will outwit Wall Street. That said, the individual investor, as with any stock in which they invest, must have patience and guts. It’s not been a good earnings season, and we will see a roller-coaster volatility this year in stock prices. A slight miss in earnings or revenue will be harshly punished, and the climb back will be slow. But shrewd investors will see buying opportunities with many stocks.

    A good investor needs a strong stomach and the willingness to look past days like this. You must think in terms of years, not days if you want to beat Wall Street at its own silly games.

    1. It wasn’t the little guy that panicked and sold today after earnings. Not many residential investors engage in extended hours trading. We’ll see tomorrow what happens with price as all traders dive in. Some will see it as a buying opportunity, others will probably think more short-term and struggle to see what positive news that could possibly drive share price upwards again in the next couple of months.

      Personally, I believe there is a lot of upside potential for anyone having an investment horizon at least full 2014. In the short term (next couple of weeks), I believe it will be tough to bounce back up to where it was before the earnings report.

    2. Sadly, the approach for an AAPL investor shud be to use some of their planned dividends to buy put option as insurance when the quarterly is reported without a new catagory to bolster eanrings.

      Sure AAPL the stock took a pounding, but the put options buyers and those waiting for that <500 threshold to buy stock or Leap calls will be happy tmrw

    3. 2. Or, the high projections were deliberate, giving analysts a method to slam the stock, causing the little guy to panic and sell

      That’s certainly what’s been done before and fits the behavior. I consider it plain old manipulation.

    1. At this time, Apple should take Icahn’s “advice” and do a significant stock buyback. Apple’s leadership was already planning to do so, given key opportunities. This is a key opportunity.

      1. Don’t know if a company can do that. Since they know what is being reported beforehand, using dips that their report created, … may be considered by the SEC as insider trading.

        Just a thought.

  3. How is this strange in any way? Speculators ALWAYS run up AAPL in advance of earnings, events, releases, etc and ALWAYS dump the stock the second the anticipation is over. That’s how AAPL works. Its stock price has nothing to do with the company’s performance.

    1. That’s why I always have to laugh when before earnings all these analysts have to put in their stupid guess-timates about revenue, EPS, unit sales, etc. What freaking good does any of that do if the share price has nothing to do with Apple’s share performance? I could hire a chimp and just let him pick random numbers and no one will know whether Apple’s stock is going up or down. Actually it’s not even a coin flip’s chance anymore. Apple will always go down the same way Google and Amazon will always go up on earnings whether they miss or not. Apple is simply being rigged for poorly informed shareholders to lose their shirts. It is absolutely impossible for Apple to beat Wall Street’s expectations in every category.

      And about this buying opportunity nonsense. Google went up $130 points on earnings and investors still considered Google a buying opportunity. Only Apple has to go down $30 to be considered a buying opportunity despite the fools are always claiming how undervalued Apple is. Well, now its undervalued even further, but is that worth celebrating? Apple will simply stay undervalued forever as the stock continues to drop quarter after quarter. A stock should only be continued a buying opportunity if it has a likely chance of going up. The odds are definitely not in favor of Apple’s stock going up considerably.

      1. You’re missing that Apple pays a dividend. So you will be money ahead even if the stock price goes down. Buy more at a lower price and get even more dividends next After Q2. Look at the PICTURE, not how it’s framed.

  4. Although MDN and its minions hereabout continue to blindly support the unsupportable – we are suffering through the Tim Cook era. One of these days, such as this one, that will be over.

  5. It seems every stock manipulator has his hands in Apple. Whoever is selling Apple stock, its not the individuals who believe in Apple and are willing to take a long term view.

    Most such major stock movements are driven by speculators covering a position. So who was long on Apple?

    Apple shareholders who sit tight will benefit from Apple’s stock repurchases which will now be made at a lower price.

    I wonder if Icahn is gnashing his teeth today…

  6. The robot traders sell on news volume. There are a lot of people checking in on the Apple quarterly report, so the stock is bound to drop. Tomorrow there will be lots of news about the drop, so expect the price to drop more. Good news/bad news, it’s virtually irrelevant, the robots sell. Anyone still think WS operates on logic?

  7. Assuming the stock stays down at 500 for a while, the good news is that when the dividends are released next month, I will gain 8% more stock than I expected.

  8. Glad I didn’t buy stock before earnings were released.

    I thought I missed the boat in buying more shares when it was down before Icahn announced he purchased shares over twitter.

    Now I have a shot at buying some shares under $500? If so, I’ll load up on a few.

    1. Yes, you are lucky, it is all about timing, don’t we wish we have a crystal ball so we can foresee the future?. That would help us to avoid a lots of trouble in life?.

    2. Now’s the time. Wish I had the cash. I’m not worried about my paltry little 17 shares. A year from now, they’ll be worth 2x what I paid ….. About $320.

    3. Actually I sold some of my AAPL last week, pretty much at it’s recent high point and about when Icahn announced his increased share holding. I was convinced that Apple would publish good sales figures, but equally convinced that the stock market would smack AAPL down irrationality. I’m now wondering when the best time will be to buy back in.

      I’ve got two bunches of AAPL. One lot were purchased a long time ago ( mostly at $49 or $120 ) and held. The other lot started out as a modest investment, but they have been sold and bought back again on many occasions, trying to ride some of the more predictable trends for AAPL and have increased in number significantly. The actively traded AAPL shares are now worth a total of about half of those that were bought and held, but the initial investment was about one tenth of the amount I invested in the shares that were bought and held and that increase happened over a much shorter time scale too.

      Movements in AAPL may be irrational, but those movements are largely predictable. You can be fairly sure of a run-up before financial results or a major product launch and be equally sure about a drop immediately afterwards. In the shorter term, you will often see gains from Monday to Wednesday, with losses on Thursday and Friday.

      I’d prefer that the shares weren’t part of Wall Street’s casino game, but the reality is that they are and so my investment strategy takes Wall Street’s shenanigans into account.

  9. LOL… we veterans are used to it. Almost every quarter, every milestone, every record number of sales, profits, Apple Stocks TANKS and get a pounding from ANAL-yst, Wall StreetWalkers! The sluts in suits bends over to manipulate the stock and just like Oliver when all is done..”Please May I Have Some More” up my ANAL-yst ASS!

  10. Nothing surprising, Wall Street punishes Apple for it’s success and rewards analysts for their mediocrity. I think the long term investors such as myself are no too worried about this. Thanks to those who are making insightful posts about this.

  11. How come nobody is talking about the biggest single expense item that Cook has on his plate? Instead of amping up R&D or accelerating product release cycles to put the critics in their place, Cook is blowing $5 billion on an aerobie office building! Wall Street may be greedy bastards, but they sometimes know when a company is wasting resources on useless pet projects.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.