AAPL Stock Recoups Losses Incurred After Tim Cook Slashed Apple's Revenue Guidance

[MacRumors]

AAPL shares are currently trading above the $157 mark on the intraday market, recouping virtually all losses incurred since Apple CEO Tim Cook slashed Apple's revenue guidance by up to $9 billion for the first quarter of its 2019 fiscal year.

AAPL closed at $157.92 on January 2, immediately prior to Cook revealing the shortfall in an after-hours letter to shareholders, and is now trading just cents below that level. The stock has gradually recovered over the past two weeks since establishing a new 52-week low of $142 on January 3.

Apple share price now returned to level before Tim Cook's letter to investors. - Horace Dediu (@asymco) January 18, 2019

Apple originally guided for revenue of between $89 billion and $93 billion in the three-month period ending in December, but revised its estimate to $84 billion due to "fewer iPhone upgrades" than it anticipated, primarily due to "significantly greater" economic weakness than it projected in the Greater China region.

The letter sparked concerns among some investors and analysts that Apple has reached "peak iPhone," especially given Apple's revelation that it will no longer disclose unit sales in its quarterly earnings reports going forward.

While the iPhone accounts for around two-thirds of Apple's revenue, the company has repeatedly touted the continued growth of its services, including the App Store, Apple Music, iCloud, iTunes, and so forth, which combined for a nearly 19 percent increase in revenue on a year-over-year basis in the quarter.

Apple is widely expected to launch a streaming TV service this year that will likely boost the revenue of that category even further.

In his letter to shareholders, Cook said Apple is undertaking and accelerating multiple initiatives to improve its results, including making it simple to trade in a phone at its stores. Back in November, Apple launched a promotion offering up to $100 in extra trade-in credit towards a new iPhone XR or iPhone XS.

AAPL will report its earnings for the first quarter of fiscal 2019 on January 29, followed by a conference call to discuss the results at 2 p.m. Pacific Time.

Article Link: AAPL Stock Recoups Losses Incurred After Tim Cook Slashed Apple's Revenue Guidance

 

[KPandian1]

This is somehow a reflection of Apple doing well suddenly - or the realistic simple market fluctuation?

No-news news!

 

[BootsWalking]

Not quite - AAPL started dropping long before Tim made the news official. It was the worst kept secret on Wall Street. Analysts were warning about this for a while.

 

[Falhófnir]

Apple was trading in the $210s up to early November - ~$207 is the Trillion dollar mark, it's still a long way down from when it was riding high in the second half of last year... though was clearly undervalued at $150 and very cheap even at its current price.

 

[pmau]

Apple was trading in the $210s up to early November

Yes. Still over 30% they would need to gain. This is not great news.

 

[DotCom2]

Waiting to see what happens after they report on the 29th. Hopefully, it's already factored in, but we'll see on the 29th I guess.

 

[Baymowe335]

Please don’t make this an AAPL stock update forum.

Stocks move up and down...sometimes quickly. The whole market moved down a lot and had now recovered some.

Apple has a way to go, but it basically moved from $160 to $230 in 5 months last year.

People constantly quoting the $230 price don’t really have much to offer.

The price of AAPL basically means nothing without context.

 

[Wags]

Apple was trading in the $210s up to early November - ~$207 is the Trillion dollar mark, it's still a long way down from when it was riding high in the second half of last year... though was clearly undervalued at $150 and very cheap even at its current price.

Not sure how much under valued. Current price about same as last year at this time. Was trading over $230 before iPhone launch. Apple over hyped and underperformed. Is the next iPhone good enough to get price back to $230’s? Probably wasn’t realistic for Apple to be that high. Somewhere in between.

 

[az431]

Shocking. Everyone on MR said they were going out of business unless the price of the XS Max was dropped to $199.

 

[AlexH]

A slightly more long term view shows Apple down approximately 30% from its high. Perspective is important.

 

[max.ine]

A slightly more long term view shows Apple down approximately 30% from its high. Perspective is important.

You can’t realistically expect profits to infinitely rise forever.

I think people should invest if they believe in Apple, not because they want to make a quick buck. Perhaps recent fluctuations have weeded out some of those people.

 

[Juicy Box]

This is somehow a reflection of Apple doing well suddenly - or the realistic simple market fluctuation?

It could be many things.... Many times, the markets react to news emotionally and not logically, and it works both ways.

You see this when stock prices start to rise, many investors react emotionally to all the good news related to the stock price and many people end up buying just based off of this news. This could lead to over valuing, and usually a correction follows.

If there is a bunch of negative news, but not necessarily anything too bad for the company long term, investors could react emotionally to the bad news, and start to sell. This leads to other investors reacting to the dropping stock price and they start to sell. As everyone sells, a few people look at the companies financials, their track record, and what they suspect will happen in the future and they buy while everyone else sells.

There is also institutional buying/selling that impacts these fluctuations. Sometimes institutions that have millions of dollars invested will automatically sell their shares if the stock price drops by a certain %, and this in turn could lead to other investors/institutions auto-selling.....

And, there are many other reasons why this happens, but the above seems to happen often when it comes to Apple.

 

[Heat_Fan89]

You can’t realistically expect profits to infinitely rise forever.

You have just perfectly described the problem Wall Street and equity markets in one sentence.

 

[Juicy Box]

Everyone on MR said they were going out of business unless the price of the XS Max was dropped to $199.

I have been pretty active on the forum lately, and I don't remember any post stating this......

Actually, it seems like any posts on MR lately that state something similar to "Apple is doomed" are almost always people posting it sarcastically.

 

[Carnegie]

I'm interested in how much stock Apple will have bought back between its guidance revision and the as of date it will use on the upcoming 10-Q (which should be late January).

I'm also a little curious about what Mr. Buffett did, regarding AAPL, in the December quarter.

 

[ajfahey]

I really believe Cook needs to be shown the door. Every day, his leadership style and their results are looking like what conventional leaders like John Scully did to Apple who was driving the company into a technology development ditch by focusing on increasingly reducing incremental development of non compelling products rather than finding new innovative disruptive technologies that would lead to a decade of explosive growth.

 

[512ke]

In my opinion, there's three things happening. 1) Global economic headwinds especially in China; 2) High value of the dollar; and 3) Market saturation.

A separate question is why. 1) Trade war plus hangover from sugar rush of tax cuts; 2) I have no idea; 3) iPhones are expensive and lack a compelling reason to upgrade.

With pressure coming for Apple to reduce its 30% app store fee, the only way the stock is going to increase meaningfully, is for the company to find new revenue sources.

Is that gonna happen? I haven't read anything to suggest it will. So probably for the short term AAPL will not regain 224/share.

That's my wild speculation, to add to the analysts' wild speculation.

 

[Cosmosent]

If the Trade Deal does NOT materialize later this month, then AAPL will RE-test it's Lows for Jan !

The whole market moved UP on HOPE of a Trade Deal !

AAPL traded @ $233 & change on Oct 3rd, so Cook's Share Buyback Program was a BIG Loser !

 

[HacKage]

It's amazing how stocks can look when you look at the graphs with a magnifying glass. They are down 30% in 6 months.

 

[rtomyj]

I have made some decent mons buying low on AAPL. Thanks guys!

 

[HacKage]

It's amazing how stocks can look when you look at the graphs with a magnifying glass. They are down what, $70/share in 6 months.

 

[Falhófnir]

Not sure how much under valued. Current price about same as last year at this time. Was trading over $230 before iPhone launch. Apple over hyped and underperformed. Is the next iPhone good enough to get price back to $230’s? Probably wasn’t realistic for Apple to be that high. Somewhere in between.

Probably for now $207 and $1T is back out of reach, though I don’t think climbing back towards the $190s is wholly unwarranted given they’re still posting relatively strong revenue numbers, even if numbers are a little flaky

 

[ghanwani]

Has nothing to do with Apple. The whole market has been up since then.

AAPL is significantly lagging the S&P500 YTD.

 

[Awesom-0]

I sold out after I quadrupled my money at like $190 a share Yeah I should of waited but I still expect a big drop and not worth the gamble to me.

Should of kept my Netflix as well but was happy with my profits lol.

Too spooky for me to buy Apple again Not worth the risk.

I did hop on the Microsoft train after Balmer left

Not a fan boy of anything but after that mess I couldn't resist

Don't know how many of you stick it out for so long

 

[Constable Odo]

Thanks to Apple's iPhone greed and hubris, loyal Apple shareholders had to take heavy losses. Apple has decided to ignore large segments of the smartphone market by jacking up prices well beyond what most consumers are willing to pay. In China, consumers only need a $200 Android smartphone to run WeChat, so they're not going to pay much more than that. Forget about them buying some $1000 iPhone. Apple has completely lost the Chinese smartphone market and now there is no way to get it back. Apple's stock price is in the toilet and that's where it will stay unless Tim Cook finds some other business that is unrelated to iPhone sales. I wouldn't count on Apple Services to help boost Apple's share price because big investors only understand unit sales when it comes to Apple. Apple is so stupid for not making a cloud business acquisition when Wall Street praises all tech companies with cloud businesses to have unlimited growth potential.

I've had my Apple stock since 2004, so this current drop isn't much of a disaster for me, but I don't see any big investors jumping on Apple when there are so many other good stocks to choose from and they know Tim Cook is clueless when it comes to keeping value in Apple. I'm just disappointed because Apple has so much cash to spend to diversify the company and doesn't seem to be doing anything worthwhile with it. I'm sick of listening about declining iPhone sales. It certainly was expected considering the high price of iPhones.
[doublepost=1547838839][/doublepost]

It's amazing how stocks can look when you look at the graphs with a magnifying glass. They are down 30% in 6 months.

Amazon is absolutely destroying Apple in terms of overall value. Apple's boasting about profits and cash is a joke because big investors don't seem to give a damn about those things. Only growth matters and Apple has nothing to offer. Their iPhone business is completely ruined and they have nothing to replace it with. Tim Cook's lame excuses fell on deaf ears as all the big investors had already left the room. How many companies write letters to investors telling them to bail before the quarter ends? Not many, I'm sure.