On Wednesday, Apple reported that its blowout 2020 holiday quarter (fiscal Q121) broke nearly every one of its financial records. Revenue of $111.4 billion, up 21% from last year and $8 billion more than analysts had expected, was a record. Profits of $28.8 billion, up 29%, was also a record, as were the sales totals in every geographic region and in most product categories. And, yet, Apple’s stock price dropped.
After posting all of the record results, Apple’s shares slumped more than 3% in afterhours trading to $137.67.
Part of the problem on Wednesday was that CEO Tim Cook and CFO Luca Maestri tamped down expectations for the current quarter. Apple, citing the COVID pandemic, again decided not to provide the kind of precise revenue forecast for the quarter starting 2021 that it did before the pandemic. Maestri did say that Apple’s wearables and accessories business would “decelerate” and that its services business was particularly strong in 2020, so this year “faces a tougher year-over-year comparison.”
Another issue is that Apple’s next big move isn’t yet visible to outsiders. Reports suggest the company is working on electric cars and virtual reality gear, each of which could open another significant market for CEO Cook and his team to conquer over the next decade.
But Cook didn’t give anything away on Wednesday, despite a lot of prodding by analysts during a conference call.
MacDailyNews Take: As it ever was. Investors will wake up eventually as Apple remains woefully undervalued.
Crook! WS bullshit again. Always looking forward and not seeing what Apple has accomplished. Why is everybody bullish on Apple. My accountant still dismiss the fact that I am over 1000% in my AAPL investment just before the release of the original iPhone. It is a worldwide posture… Or imposture… Nevertheless, own it, don’t trade it and be patient… Fu** them all. Good job Apple.
Because Microsoft and Intel are their darlings, but it isn’t going their way.
Stock Market101: Wall Street doesn’t control, decide or “set” the price of a stock. Nor does it “reflect” the state of the economy, let alone the state of any company represented.
For example, the success of Apple (or lack thereof) has no direct effect on the price of Apple’s stock. Rather, when traders are (in general) more interested in selling it than buying it, the price of a stock declines. The opposite is also true.
If you “Play” the stock market (trade) you quickly discover the only way to make money on a rising stock is to be among the first to buy it (when it is still low). And the only way to avoid losing money on a declining stock is to be among the first to sell it (when it is still high). The net result, folks, is traders don’t watch the company behind the stock. They are watching each other. If a few start selling a stock, the rest rush to sell it, too. If they hear some news (or some analyst’s comments) that they think will cause other traders to react, they will try to be among the first to so react. Thus they become a self-fulfilling prophecy.
Investors, on the other hand, are interested in the company. They buy and hold for the long term. For them, it’s a savings account with (hopefully) a better return. But because of this, Investors don’t influence price changes in any way — until and unless they sell.
Wall Street is not smart, stupid or clueless. People who cry, “They just don’t understand Apple,” don’t understand the market. It’s a mob-mentality, pure & simple. They don’t care about you, me or Apple. They only care about each other and any “skill” they may have is nothing more than the ability to predict what other traders might do before they do it.
In other words, “traders” are like sheep… If a few suddenly start to run, they all run and in the same direction. Only afterward will analysts attempt to figure out why.
What’s the solution for Apple? Minimize their reliance/exposure to traders. So, you begin share buy-backs and bond issues – with an eye toward reducing your risk (from traders) or perhaps one day eliminating it! (Get out of the stock market and go private. All they’d really need is lots of money to fund themselves! Hmmm.)
I’ll get off my soap-box, now.
Share buybacks are a waste of money most of the time, Apple should save and invest outside Wall Street more, have some buybacks 1/3 if you must piss it away, but the rest should be outside of Wall Street. Apple should think more along the lines of Norway’s approach and not the UK’s approach when comes to saving for the future. You don’t have to spend like a drunken sailor (average American).
@Steve Really well written, simple analysis. Well done.
AAPL is priced to perfection these days, so I suspect in the weeks and months that follow (barring a major market correction which keeps getting whispered about) it will catch up to its price. Even if there is a major market correction, Apple is a strong company to hold and with its mountains of cash, is about as “safe” as any equity can be.
The M series chip will make inroads, as will many of the other pieces of hardware well-noted here, but I’m also very curious to see how the services business goes.
For our family signing on for the Apple One Premium Package ($30/month) was only $5/month more than we were already paying for Apple Music and iCloud storage. The added value of Apple News, AppleTV+, and the new Apple Fitness App (which my wife loves) is just icing on the cake. And all of these will drive more hardware growth as well as offering a steady stream of monthly revenue. Without looking, we’re paying $360/year to Apple now and it has nothing to do with software or hardware.
The other area that is something of a sneaker wave is financial. ApplePay, and AppleCash and AppleFinancing, and AppleCC… It’s an interesting and seemingly successful move by Apple into finance. I suspect that will pay dividends directly and indirectly as well.
As for the future? Yeah, the car. Sure. Maybe. Maybe not. Don’t know.
But maybe a wireless company? Our family ATT wireless bill sure seems like there is a LOT of profit in there.
It’s not a market. It’s a casino.
God-forbid some patriots figure out a way to kneecap the banksters like Operation Gamestop, the Mafia will come after you.
M1 is “enough” to contradict the price drop….not to mention all the other cylinders firing. Besides, the vaccine is having an appreciable effect on the V.
Also, the Apple watch is 1 generation away from being must have for even more people. Not bad for something the tech experts didn’t like.
Apple is the one kicking ass when compared to the other tech companies.
Did Apple meet analyst whisper numbers? I just figure investors might ignore Apple when there are so many other stocks they can make more money from. Investors seem more likely to gamble on momentum stocks during the pandemic. The big investors enjoy playing the recovery strategy by betting on stocks that were down will now quickly recover as the vaccinations take place and the stimulus packages start to kick in. In their perspective, Apple is already high enough and they can’t make as much money from Apple. It’s just a matter of quick greed instead of long-term investment.
I’m not concerned because Apple’s stock will still continue to rise over the long-term and when it does, I’ll already own it. Apple has done almost everything a company can do for shareholders when compared to most other companies. I hope Apple will increase R&D spending or buy more video content with the money it’s making. If the big investors aren’t satisfied, well, that’s just how it is. Big investors will probably get back to Apple at some point, but I suppose there are much better options for them right now.
It’s rather ridiculous how Apple sold off the same way Boeing sold off despite the huge difference in financial results. To many casual investors it wouldn’t make a whole lot of sense but that’s how the market is. I really can’t complain as my portfolio has done well during the pandemic, thanks to Apple.
AAPL is one of the safest investments in these times. 1st, it’s one of a 1/2 dozen stocks that make up nearly 25% of the S & P. This had broad implications, but one critical; many insurance companies, retirement plans and cities/municipalities hold APPL for a long-term and stable investment.
Add to this, the Fed’s willingness to step in (buy bonds/lend) wherever there’s a need for market stability. A material drop in AAPL (or any of the other 5-ish S&P Bigs), would be disastrous on critical market players mentioned above. New Fed Chr and Biden have the same mindset of “whatever it takes” and “it’s not time to worry about that” (debt). It’s in the DNA of the current admin to protect, prevent and promote market growth. This is not new, but newly invigorated.
All this before talking about Apple, the Co…which is healthy. Because of its health, its place in the market and the weaknesses seen throughout the econ, AAPL is a refuge. It’s seen as a safe place to park and invest. The drop in share price is a pure bedwetter reaction from signals on the surface (no qrtly forecast), but w/ little concrete substance.
M1, AR headset, services, continuing & more concrete car info, vaccine hope…there’s little in the way of stability/growth, imo.
AAPL dropped primarily because of the Robinhood/GameStop et al short-squeeze fiasco. As the HedgeFunders got crushed they sold some of their portfolio winners (eg-AAPL) to cover their margin calls…….
Today they have cracked down on some of that nonsense and things have calmed down a bit. Never mind the non-stop upgrades coming out today. This morning the dip in price was a nice entry point for those looking to add to their LONG TERM investment thesis on AAPL.
Bear in mind that as TC stated on the CC they lost 4-7 weeks of iPhone 12 sales since they started late in the beginning of the Quarter. Sales could also have been higher with the stores being open and not closed.
Finally– AAPL stock continues to be the safest place to park your money with all the turmoil and bedwetters we have stirring the financial septic tank….
Nonense? What nonsense? Hedge fund traders who don’t like losing money in a game where they get to make up all the rules? Oh please.
Sure, GameStop’s price may not reflect market realities. But tell me, does Tesla’s? Or Amazon’s?
Wait for it….
The article fails to mention AAPL had risen to record highs in anticipation of the stellar results. The ol’ “buy on rumor, sell on news”.
The market is starting to anticipate big results from Apple, rather than being surprised by them.