William Gallagher
Apple initially saw its stock price plummet right after Thursday's earnings, but less than 24 hours later it has risen to its highest price in five months.
Despite Apple's Q1 earnings being hit hard by iPhone production problems, the resulting dip in the stock price lasted less than half a day.
Shortly before the earnings report was published, Apple was trading at $149.38, and then fell to $145.90 afterwards. By Friday morning, February 3, 2023, it had risen to $145.99, and at time of writing is at $156.50.
That's an overall increase of over $10 since earnings. It is also the highest price the stock has hit in the entirety of 2023.
It's likely that analysts and investors were reassured by Cook's ascribing the lower than expected results to factors that they can see changing. One of those factors is long term, such as the economic situation caused by the Ukraine/Russia war, while another is the volatile foreign currency exchange market.
But overall, the greatest dent to Apple's revenues was because of how it had been unable to manufacture enough of the iPhone 14 range to meet demand. Severe COVID lockdowns in China caused long delays, but Cook was able to say that, "Production is now back where we want it to be."
"We manage for the long term," he added, "we adapt quickly to circumstances outside our control, while delivering with excellence into things we can we invest in innovation in People and in the positive difference we can make in the world."
There is also the fact that despite the production problems, the currency exchange issues, and the general economic climate, Apple still managed to only barely miss its earnings targets. While other big technology firms are laying off workers by the thousands, Apple appears to look like a more solid bet for the future.
Chip Loder
Marko Zivkovic
Wesley Hilliard
Christine McKee
Malcolm Owen
7 Comments
There are three key things that are driving the stock re-bound,
1) Increasing installed based. All GEOs and all product categories. Up over 150 million in last year. Even in this slowing environment, all is taking share and adding new users. Who will, eventually, buy more/new Apple products and feed Service growth
2) Increasing engagement of the users across the Apple platform. Luca mentioned this several times on the call, and how give him high comfort on future growth
3) Increasing margins. Apple projected all-time record gross margins for the March quarter. Even in the face of FX and the macro environment. This points to material step-up in margins when looking forward
Reports of Apple's demise were exaggerated, to paraphrase Sam Clemens.
I would have a lot more questions had Apple not seen a year-over-year decline because they've been telegraphing their production concerns throughout the quarter.
Forget the temporary dip - if you were able to buy AAPL in that brief moment in time, great. Focus on the ~US$7 increase from the pre-earnings price to the time of the article being written. Apple is a company that consistently delivers great value to both customers and shareholders and a roughly 5% increase in the share price once the news has been digested shows that investors recognise the quality of the performance.
Remember when AAPL stock was over $180?
Pepperidge Farm remembers.