Apple reported better-than-expected results for the September quarter, yet the stock fell about 1% after the close, to $335. Revenue came in at $114.5 billion, up 12% year over year. Earnings were $2.10 per share.
What the consensus is. It is the average analyst forecast for revenue and earnings. Apple beat both figures. EPS is a company's profit divided by the number of shares.
Why this matters to a trader. The report came in stronger than expected, yet the stock still fell. Below is what made up that gap.
What did the numbers show?
- EPS $2.10. The forecast was $2.00.
- Revenue $114.48 billion. The forecast was $113.47 billion.
- Net profit $30.71 billion. Up 12% year over year.
- iPhone $57.58 billion. Up 17% and a September-quarter record.
- Mac $10.79 billion. Up 24% year over year.
- Services $31.57 billion. Up 10%, exactly in line with the forecast.
Where are the weak spots?
The weak areas are specific too. They concern China and everything sold around the iPhone.
- $17.54 billion - mainland China, up 21% year over year, but the market expected about $18.55 billion
- $8.30 billion - wearables, home products and accessories versus a forecast of $9 billion
- minus 10% - the drop in iPad sales
Why didn't the record impress?
Part of the result was one-off. Gross margin was 47.9% against the company's own guidance of 47-48%. One percentage point here came from tariff refunds.
- +$0.05 - the contribution of tariff refunds to earnings per share
- $2.05 - EPS without that effect, that is, almost in line with the consensus
How did the market react?
The decline began before the report. On Monday the stock closed at $338.32, down 1.83% for the day. After the release, the stock moved to $335.
Key point: the options market had priced in a move of about 3.5% (a Pepperstone estimate), but the actual move was three times smaller. That is how the options market estimates the expected size of the move after a report.
What's next?
- A new leader. This is the first full reporting quarter under the company's new chief executive, John Ternus.
- Costs. Memory chips are being bought up by data centers for artificial intelligence, and SK Hynix forecasts a memory shortage through 2030.
- Earnings season. Apple's report kicked off a busy week of Wall Street releases, and the dates are handy to keep in the economic calendar.
Did you hold AAPL through the report?
The report comes out after the market close. The position is left in the gap, and a stop at the open won't save it. Some prop programs prohibit such trades: you can't hold a stock through earnings or enter a few minutes before the release, and each company has its own list of available stocks and indices. You need to check this in advance: the cost of a mistake is a closed account. A filter by market and style immediately shows who allows trading on earnings.