Light Holiday Forecast Weighs on Apple

Update3 years ago
Today's light forecast for the holiday quarter, combined with the macro concerns, is likely driving the stock after hours.
Apple posted a solid quarter with sales and earnings above Wall Street's estimates. Despite the record annual profit and revenue, Apple shares fell in after-hours trading.
The reason: all eyes focused on the company's (light) forecast for the all-important holiday quarter.
The company gave an outlook for the December quarter that was a bit below analyst estimates, despite the launch of iPhone XR sales in early October. Historically, the holiday quarter is Apple's largest in terms of sales and profit.
The light forecast in such a critical period is causing concern amongst short-term traders trying to make a quick buck on Apple stock heading into the holidays. The forecast comes amidst uncertainty over how Apple will handle macroeconomic issues in China and how those might affect consumer willingness to upgrade their devices.
Apple launched large-screen and dual-Sim smartphones this year, which were (and still are) expected to play well in the Chinese market. However, Apple must contend with trade-war tensions and new rules around game launches. Both could affect its revenue opportunities in China.
In a nutshell: today's light forecast for the holiday quarter, combined with the macro concerns, is likely driving the stock after hours. Apple's CFO also said the company will stop giving unit sales data on iPhones, iPads, and Macs in the near future. Investors who trade based on this data are hence also concerned.
Taking a step back, we don't believe Apple's intrinsic value just declined by $50-100B (which is implied by the stock's ~5-10% after-hours decline). The holiday quarter is important, but we think the guidance is conservative.
The long-term thesis on Apple is about its sticky software & services ecosystem surrounding its flagship iPhone user base. That's a wide moat enabling Apple to maintain pricing power and therefore sales and earnings growth, even though it may "miss" a quarter here and there.
We remain positive on the long-term prospects for Apple.
As of this writing, AAPL was a portfolio holding of Titan Invest. This security may cease to be a portfolio holding at some point in the future.

Become a Titan investor today.

Titan Invest is an SEC registered investment adviser. By using this website, you accept our Terms of Use and Privacy Policy. Titan’s investment advisory services are available only to residents of the United States in jurisdictions where Titan is registered. Nothing on this website should be considered an offer, solicitation of an offer, or advice to buy or sell securities. Past performance is no guarantee of future results. Any historical returns, expected returns [or probability projections] are hypothetical in nature and may not reflect actual future performance. Account holdings are for illustrative purposes only and are not investment recommendations. The content on this website is for informational purposes only and does not constitute a comprehensive description of Titan’s investment advisory services.
Refer to Titan Invest’s Program Brochure for more information. Certain investments are not suitable for all investors. Before investing, consider your investment objectives and Titan’s fees. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested. Brokerage services are provided to Titan Clients by Apex Clearing, an SEC registered broker-dealer and member FINRA/SIPC. For more information, see our disclosures. Contact: 110 Greene Street, Suite 910, New York, NY 10012. Information provided by Titan Support is for informational and general educational purposes only and is not investment or financial advice.
© Copyright 2020 Whisker Technologies, Inc. All rights reserved.