Apple shares traded down 4% after reporting earnings last week, giving up gains on the day, “as investors misinterpreted Apple reporting iPhone revenue below expectations,” Gene Munster and David Stokman write for Loup Ventures, “along with a perceived lack of visibility for the December quarter.”
Adjusting for iPhone timing and Apple’s approach to guidance during the pandemic, reveals a September quarter that was on track to report accelerating revenue growth and a December outlook that was effectively in line with consensus.
As evidence of the strength of Apple’s business, the September quarter concluded a year in which the company had record revenue, EPS, and free cash flow despite the uncertainty.
More important than deciphering near-term stock movement is the reality that Apple’s business is stepping into a new growth curve, which is driven by three factors: First, a new normal that could endure for years, in which the company’s products are foundational to working and learning. Second, a three-year iPhone upgrade cycle powered by 5G. Last, the appeal of Wearables is expanding beyond early adopters into mainstream Apple users, as the everyday use cases strengthen. The combination of these factors equates to a digital transformation in which Apple will be a cornerstone.
MacDailyNews Take: More people are upgrading to iPhones than downgrading to Android fakes. And, we know, that the more iPhone users there are, the more eventual iPad, Apple Watch, and Mac users there will be in the future – and the more Services subscribers, too. In a nutshell, Gene Munster is right: Apple faces a mountain of growth.