- Apple missed FQ1 2023 revenue projections by $4.5 billion.
- CEO Tim Cook's Apple missed EPS forecast by 7 cents.
- iPhone sales came in $2.6 billion below forecast.
- AAPL stock dropped 3.2% afterhours.
Apple (AAPL) stock erased most of its Thursday gains afterhours as a plunge in iPhone sales led the company to miss Wall Street consensus for earnings and revenue in the fiscal first quarter that ended in December. Apple reported adjusted earnings per share (EPS) of $1.88, 7 cents short of consensus, and revenue of $117.15 billion – $4.5 billion below the average forecast. The iPhone, Wearables and Mac product segments were largely to blame, while iPads picked up some of the slack.
AAPL stock dropped 3.2% afterhours to just below $146. However, Apple was no outlier. Both Amazon (AMZN) and Alphabet (GOOGL) produced earnings with their own foibles and each sold off circa 5% afterhours.
Apple stock earnings
The iPhone revenue of $65.7 billion was $2.6 billion below the forecast. Wearables revenue of $13.4 billion and Mac revenue of $7.7 billion both missed their respective forecasts by $2 billion, give or take.
The iPad and Services segments were the stars of the quarter. The iPad revenue of $9.4 billion was $1.7 billion ahead of forecasts, and the Services segment brought in $300 million ahead of expectations.
"As a result of a challenging environment, our revenue was down 5% YoY," said CEO Tim Cook, "but I'm proud of the way we have navigated circumstances, seen and unforeseen, over the past several years, and I remain incredibly confident in our team and our mission and in the work we do every day.
Tim Cook offered three primary reasons for the underwhelming quarter. First, covid-related shutdowns at factories in China reduced the supply of iPhone 14 Pro and Pro Max models. Second, the macroeconomic sphere with constant talk of a looming recession in 2023 seems to have depressed consumer spending. Lastly, and probably most importantly, the strong US Dollar created an enormous currency headwind that reduced revenue by an outlandish eight percentage points.
According to a recent research note from IDC, Apple iPhone sales fell 15% from the same quarter a year ago. Equally important though is that higher margin iPhone Pro and Pro Max models faced a reduction in supply due to the production bottlenecks in China, so Apple ended up selling a much higher proportion of lower margin iPhones than expected.
Source: App Economy Insights
Apple stock forecast
Despite the sell-off, the Apple stock chart offers some interesting points for bulls. First, AAPL stock actually cratered all the way to a low of $142.30 in the postmarket before enough dip buyers emerged to push shares up toward $146. Apple stock also performed better than peers Amazon and Alphabet as well. If the sell-off does continue on Friday, shareholders can be heartened by the fact that historical support sits nearby at both $140.50 and $142. Longer-term support at $125 from early January. Additionally, AAPL stock did break through the $150 resistance barrier on the 4-hour and daily charts, so a period of consolidation attuned to the macro picture might ensue, but expect bulls to retake $150 soon enough.
AAPL 4-hour chart
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