Apple stock gets nailed as CEO Tim Cook spooks investors with one phrase

news7f02/03/2023

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Apple stock gets nailed as CEO Tim Cook spooks investors with one phrase

Apple (AAPL) Chief Executive Officer Tim Cook and CFO Luca Maestri, his right-hand man, briefed their inside Wall Street economist about the tech giant’s earnings call late Thursday and analysts Investors don’t like that.

Apple shares – returned to a slight positive in after-hours trading due to upbeat Chinese demand comments on earnings call – fell more than 3% in pre-market trading on Friday.

The retracement is likely to reflect a rare earnings miss for Apple, along with Cook and Maestri using some variation of the phrase “challenging economy” seven times in the earnings call. Both are unusual for mighty Apple.

“The macroeconomic environment in the last quarter was clearly tougher than it was 12 months ago,” Maestri told analysts.

Those challenges can be seen in Apple’s earnings.

Apple earnings overview

Revenue: $117.1 billion vs. $121.1 billion expected
Adjective. earnings per share: $1.88 vs. $1.94 expected
iPhone revenue: $65.7 billion vs. $68.3 billion expected
Mac revenue: $7.7 billion vs. $9.72 billion expected
iPad revenue: $9.4 billion vs. $7.7 billion expected
Wearable devices: $13.4 billion vs. $15.3 billion expected
Service: $20.7 billion vs. $20.4 billion expected
wins: 1) Chinese demand seems to be growing; 2) $50 billion plus cash on the books; 3) Supply constraints are almost over.
miss: 1) No March quarter revenue guidance again; 2) Negative executive action on the economy; 3) Wearables sales are weak due to economic conditions.

Despite the rare miss and cautious tone from Cook & Co., the bulls on the Street are favoring the stock.

The general vibe is that everyone knows this quarter will weaken as the Chinese economy gradually reopens and US consumers spend more cautiously. In turn, Apple’s most recent quarter could be as bad as it has been for the iPhone and Mac maker this year.

Or so the bulls are betting.

Bears will be quick to point to negative sales growth but we note as we adjust FX that sales and outlook are flat, physically better than electronics companies Critical services are also performing better, and Apple’s install base continues to grow (more than 2 billion active Apple devices and an estimated iPhone install base of more than 1.2 billion),” Citi analyst Jim Suva said in a note to customers.

Suva – who will participate Yahoo Finance Direct on Friday discussing Apple – left his buy rating on the stock.