APPLE will dip after Q4 results on 02 Nov 2023?
Have you noticed that $Apple(AAPL)$ ‘s share price always fall after release of its quarterly results, regardless of the earnings?
I never quite figure out the root cause/s for the strange phenomena.
However, to arrive at a conclusion based solely on observation convinces no one.
Therefore, let’s look at its historical earnings instead.
Historical quarter earnings:
Consumer electronics giant — Apple has posted 3 straight quarters of declining sales. (see above)
This is an important factor that has weighed on Apple stock.
In Q3 2023, Apple’s hardware sales declined -4.4% to $60.58 Billion.
In the June quarter, Apple's iPhone revenue declined 2% to $39.67 billion and accounted for 48% of the company's total sales.
Meanwhile, Apple's Mac computer sales fell 7% to $6.84 billion. And its iPad tablet sales slid nearly 20% to $5.79 billion.
Looking at above data, there are 2 businesses that have boosted Apple's Sales & Profits.
The 2 businesses are [1] Services and [2] Wearables.
Apple Services.
In Q3 2023, Apple's Services revenue increased +8.2% YoY to $21.21 Billion.
Services include [1] App Store, [2] AppleCare, [3] iCloud, [4] Apple Pay, [5] Apple Music, [6] Apple TV+, [7] Apple Arcade and other offerings.
Apple Wearables.
In Q3 2023, Apple's Wearables, Home and Accessories unit saw sales rise +2% to $8.28 Billion.
Products under the “wearables” category include [1] Apple Watch, [2] AirPods wireless earbuds, [3] Beats headphones, [4] Apple HomePod wireless speaker and other miscellaneous gadgets (eg. Airtags).
Apple iPhones.
With the iPhone business maturing, it is only “natural” that its contributions towards Apple’s top line and bottom line would diminish overtime.
In an effort to drum up demand for its flagship product, Apple event organized a media event on 12 Sep 2023 to showcase its suite of products eg. iPhone 15, Apple watch series 9 etc..
Unfortunately, the event proved to be “uneventful” as most of the products have been leaked ahead of time.
Equally interesting, Apple stock fell -1.7%, on the day of the product introduction.
Initially, preorders for the iPhone 15 Pro models were strong ahead of its 22 Sep 2023 official launch.
But supply soon caught up with demand, an indication of lackluster demand for the new handsets.
Apple - Future product.
[1] Vision Pro.
At Apple’s annual event - the Worldwide Developers Conference (WWDC), held on 5 Jun 2023, Apple unveiled its long-awaited “mixed reality headset” - Apple’s Vision Pro.
Vision Pro is part of Apple's push into the wearables market, following the success of the Apple Watch and AirPods.
The computer goggles combine virtual and augmented reality.
Vision Pro has been earmarked for early 2024 delivery, with a price tag of $3,499 per headset.
Apple share price actually fell -0.8% after Vision Pro announcement.
Critics on social media derided the new product as "nerd goggles."
Fast forward 4 months later, a new story has emerged. (see above).
Forbes’ “timely” news article is shedding new lights on what has happened since the fateful 5 Jun 2023 unveiling.
For a behind-the-scene start, Apple has been working with [1] game developers and [2] major sports leagues, eg. the NBA, NFL, and MLB, to have dedicated sports apps ready when its headset launches in early 2024.
The first batch of Vision Pro will attract 2 categories of consumers — [a] Need Now and [b] Early adopters.
Worldwide rough estimations of “Need now” & “Early adopters” is well over 10 to15 Million, including companies that will want one of Apple's Vision Pros immediately.
This will take place mainly next year in 2024, with an estimated volume of between 250,000 to 400,000 headsets to be sold.
Other two categories of consumers, namely — [c] Fast followers and [d] Consumer audience, will kick up demand, after Apple lowers prices and have more dedicated apps for the headset.
This will happen, more likely in 2025 or 2026.
It will be interesting to watch, whether CEO, Mr Tim Cook will choose to play up Vision Pro during Apple’s next earnings conference.
[2] Apple electric vehicle (EV).
Speculation continues that Apple is looking to make a self-driving electric car.
Will this remain a rumour that never dies and gets revive ever so now and then?
It is a “huge” challenge that Apple needs it to be a success even before going about building the said EV.
The excitement it will incite will be out of the world and so will Apple’s stock price, if it ever comes to fruition.
How I see it:
I really suspect the fall in demand for Apple’s latest iPhone 15 is due to the re-surface of a 5G capable Huawei Mate 60 and 60 Pro.
With the iPhone business maturing, investors are wondering what the next big growth driver will be for Apple, the innovation company.
Likely it will not be Apple’s Vision Pro in 2024.
When Apple is able to price later versions of Vision Pro more affordably, demand might just pick up — assuming global economies is able to climb out of the rut.
Apple’s services will achieve a higher return from Q4 2023 onwards. (see above)
On 25 Oct 2023, Apple made the announcement for multiple of Apple subscription services to be revised upwards by a massive +42.92% approximately.
This included Apple TV+ & its Apple One bundles.
Like $Alphabet(GOOG)$, Apple too is facing antitrust scrutiny in the US, Europe and Asia for its App Store policies, including its +30% commission fee.
APPL - technical analysis
Year to date, Apple stock has climbed +29%.
However, applying technical analysis on Apple stock(see above), it has been trading below its [1] 20-day moving average (ma), [2] 50-day ma and its [3] 200-day ma.
My parting “unsubstantiated” observation — did you notice that most FAANG stocks also dipped upon release of their respective Quarterly earnings recently? Eg. $Meta Platforms, Inc.(META)$ , $Alphabet(GOOG)$ , $Amazon.com(AMZN)$
Personally, I feel, Apple stock is not a buy right now. It needs to form a proper base in the right market conditions before it soars.
Do you think Apple’s Vision Pro will be a revenue generator?
Do you think Apple stock price will rise or fall after its earnings reporting?
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apple earning will pump up the market?