For some reason, Apple Inc. (NASDAQ: AAPL) shares rose after it announced its earnings. It is a surprise because the figures could not have been worse. Maybe the increase was because of a $110 billion share buyback, but that does not change the fundamentals of its business. Maybe it was the tepid forecast, but that only means Apple is no longer a growth stock.
The shares may have rallied by about 8% on the news, but investor skepticism remains. The stock’s year-to-date performance, down about 4%, starkly contrasts with the S&P 500’s 6% gain. The disparity becomes even more pronounced when considering the one-year period, with the S&P up 20% and Apple only about 8% higher. This is a significant departure from the stock’s usual double-digit annual growth.
Revenue took a significant hit, down 4% from the year-ago quarter to $90.8 billion, and earnings remained flat at $1.53 per share. A closer look reveals that, despite CEO Tim Cook’s optimism on the conference call, these key numbers were undeniably alarming. (See how much money Apple makes every minute.)
Apple’s survival hinges on strong iPhone sales. They are the lifeblood of the business. Revenue from the iPhone plummeted from $51.3 billion to $46.0 billion. This means that the success, or lack thereof, of the iPhone 16, set to be introduced in September, is crucial. If its new features fail to captivate customers, Apple’s predicament will worsen.
Cook said China’s results were not as bad as expected. In the world’s largest smartphone and consumer electronics market, Apple has to do better than that. Greater China revenue fell from $17.8 billion in the year-ago quarter to $16.4 billion. The company has a great deal of competition from large China-based phone companies, and global nemesis Samsung.
Make no mistake about it. This was Apple’s worst quarter since the start of the COVID-19 pandemic. At least then, it had an excuse.
∴
Want to Retire Early? Start Here (Sponsor)
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
