Apple Shares Tank After New Quarterly Record - Why the Panic?!

Sooo Apple reported earnings yesterday right? Well, despite another earnings beat, Wall Street’s reaction was about as appealing as a muscle head who has skipped leg day for three years in a row. Yep that’s right, even with a new quarterly record under its books, Apple shares are getting clapped like it showed up to a party wearing friggin’ Crocs (get it? ‘Cause I legit just wrote about Crocs?). 

(Source: Giphy) 

Ok, but why, you ask? Well, one word: Guidance (shocker). For starters though, Apple reported earnings of $1.64 per share on a cool $94.93 billion in revenue for fiscal Q4. That’s ahead of the $1.60 per share and $94.5 billion the Street was expecting. Meaning the company behind “GlowTime” (an event perfectly named to appease the generation that’s setting our world on fire, and not in a good way) experienced a revenue bump that was up 6% year-over-year, with earnings jumping 12%. Now again, on the surface this looks like a solid win, right? Wrongo.

(Source: Benzinga) 

Apple’s stock tumbled 1.8% during the day and another 1.7% after hours (down -16.7% at the time of this writing) due to the fact that sales for the upcoming holiday quarter are about as useless as a wet noodle on Wedding night. For instance, CFO Luca Maestri stated that Apple expects "low to mid-single-digit" growth for the upcoming quarter which basically shoots a massive blank on Wall Street’s 6.8% guidance number. 

(Source: The Street) 

But, but, but… still, despite Wall Street’s thoughts, Apple is still raking it in. For example, Apple pulled in $46.22 billion from iPhones alone, which is up 6% from last year. That’s nearly half of their total revenue. Turns out, slapping some AI onto the iPhone 16 and calling it "Apple Intelligence" is still enough to keep the cash flowing. 

On the other hand, Apple’s “services” is still the cash cow that  everyone loves to talk about. They pulled in $24.97 billion in Q4, which is up 12% year-over-year. It’s not a bad number, but it’s not the blow-the-doors-off kind of growth that gets investors reaching for their wallets. Wall Street was expecting a little more juice here, but hey, Apple’s still got over 1 billion paid subscriptions across its ecosystem. That’s a lot of people paying for iCloud storage they forgot they even have. 

(Source: Barrons) 

What’s more is that Luca says we can expect double-digit growth in Services going forward (great for investor confidence). Plus, the operating margin on this baby is still sitting at a comfy 74%, which means Timmy’s empire is gonna keep raking in that sweet, sweet mailbox money. 

(Source: Giphy) 

Now for the pièce de résistance of this quarter's earnings: Apple's net income took a massive 36% nosedive in Q3 due to the fact that the EU hit Apple with a casual $10.2 billion tax bill. Apparently, the European Court of Justice decided Apple owes Ireland about €13 billion in back taxes because Ireland was giving them a little too much love on the tax breaks.

So yeah, thanks to our friends across the pond, Apple’s net income got body-slammed. But don’t worry, excluding the EU’s tax shakedown, Apple would’ve hit $1.64 EPS, which was still better than expected. Thank the Lawd for GAAP accounting, amirite?

(Source: Variety) 

In the end, even though Apples expects low to single digit sales for next quarter, keep in mind Apple’s not going anywhere. Sure, they had a meh guidance for next quarter, but they’re still sitting on a mountain of cash, no massive debt, and let’s be real—people aren’t not going to buy iPhones (even if it means lining up to drop $1,000 on a phone that looks the same as the last three). 

Additionally, Tim Cook and his crew are still hyping up Apple Intelligence like it’s going to change your life in a bigly way. In fact, Cook says it’s "supercharging" Apple’s products heading into the holiday season. Translation: they’re slapping AI onto everything from the iPhone to the MacBook Pro to make it seem like they’re ahead of the curve. 

(Source: Giphy) 

Now, is AI the future? Of course. Is this rollout enough to spontaneously make you dump your current iPhone for the new one? Maybe, maybe not. But still, Cook’s banking on AI within his products being the next big thing, so you can expect an accelerated amount of "Apple Intelligence" talk in the coming weeks. Obviously, whether it actually moves the needle next quarter or not remains to be seen.

Again, the bottom line to all this is yes, Apple beat earnings, but Wall Street’s not impressed because the holiday quarter guidance was weak. iPhone 16 sales are solid, Services are still printing cash, and AI is the shiny buzzword on the block. But thanks to a $10 billion EU tax bill, Apple’s net income got wrecked, and the stock took a hit.

(Source: Barchart) 

Meaning, if you’re long on Apple, don’t sweat it—Tim Cook isn’t losing sleep over this. But if you’re hoping for some short-term action, maybe look elsewhere for now. Just don’t be that guy who panic-sells his Apple shares because the stock dipped 2% (-1.76% MTD). We’ve all seen how that turns out. As always, do what you will with this information and stay safe and stay frosty, friends! Until next time…

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Stocks.News holds positions in Apple as mentioned in the article.