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Apple shares tumble despite earnings beat

Friday, August 04, 2023

Today’s headlines

What’s happening: Shares of Apple fell during the extended trading session on Thursday, after the company released its third-quarter results.

What happened: Apple topped market expectations due to strength in services sales.

However, the iPhone maker recorded a decline in sales for the third consecutive quarter and projected a similar performance in the current quarter.

How were the results: The Cupertino, California-based company reported a slight decline in sales, while earnings rose in the fiscal third quarter ended July 1.

  • Revenues fell 1.4% to $81.8 billion but topped Wall Street expectations of $81.7 billion.
  • Earnings grew by 5% to $1.26 per share, beating consensus estimates of $1.19 per share.

Why it matters: Strength in the services segment helped Apple report upbeat earnings for the quarter, while downbeat iPhone sales disappointed investors. The iPhone has been struggling for market share against Android-based devices.

A slower rebound in the Chinese economy impacted demand for Apple’s products, including phones and computers. Overall smartphone sales in China fell 8% during the quarter to their weakest level since 2014.

However, Apple’s sales in the greater China region jumped to $15.76 billion, from $14.60 billion in year-ago quarter. The company’s iPhone sales in India also surged by double-digits to a record high.

“This was really done by attracting a quarterly record of switchers to the iPhone, as well as having a strong upgrader activity,” CEO Tim Cook said.

Apple’s iPhone sales came in at $39.67 billion, missing market expectations of $39.91 billion, while Mac and iPad sales were $6.84 billion and $5.79 billion, respectively, versus estimates of $6.62 billion and $6.41 billion. The company’s services segment posted revenues of $21.21 billion, topping estimates of $20.76 billion.

Apple returned more than $24 billion to shareholders during the latest quarter and announced a common stock dividend of 24 cents per share.

Management warned that sales could continue shrinking in the current quarter. This would represent the fourth straight quarter of sales declining for Apple.

How shares responded: Apple’s shares fell 2.1% to $187.25 in after-hours trading on Thursday, following the release of quarterly results. The stock has added 26% over the past six months.

What to watch: Investors will watch the company’s performance in China and India. Investors will also monitor if iPhone can gain market share versus Android smartphones.

The markets today

The Canadian dollar will be in focus today ahead of the country’s jobs report

Context: The CAD/USD forex pair weakened on Thursday, while the yield on benchmark government debt moved higher.

Details: Forex traders remained cautious on Thursday after Fitch Rating downgraded the US credit rating grade from AAA to AA+.

Rise in prices of crude oil, one of Canada’s major exports, also failed to provide a boost to the loonie. WTI crude oil futures gained $2.06 to settle at $81.55 per barrel on Thursday.

The CAD/USD forex pair weakened despite the US dollar coming under pressure versus other major currencies. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.05% to 102.54 on Thursday.

The CAD/USD forex pair slipped around 0.1% to 1.3355 on Thursday, after hitting nearly a four-week low during the previous trading session.

Canadian government 10-year bond yields rose to around 3.726%, while the yield on similar US government benchmark debt climbed to about 4.167% on Thursday.

Canada’s stocks declined for the third day in a row, with the S&P/TSX Composite Index falling 0.48% to settle at 20,120.74 on Thursday.

What are expectations: Traders await economic reports on unemployment rate, employment change and Ivey Purchasing Managers Index from Canada today. The unemployment rate in Canada, which rose to 5.4% in June, is expected to remain unchanged in July.

The economy had added 59,900 jobs in June and is expected to add another 20,000 jobs in July. Analysts expect the Ivey Purchasing Managers Index for Canada to ease to 49.7 in July, from 50.2 in June.

Markets will also watch the much-awaited jobs report from the US today, which has historically impacted the CAD/USD forex pair.

Other Markets: European indices closed lower on Thursday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index down by 0.43%, 0.79%, 0.72% and 0.63%, respectively.

The news shaping the markets

The British foreign office named Nigel Casey as the new ambassador to Russia following rising tension between Moscow and London. The news sent the safe-haven US dollar index lower this morning.


The Philippines said its annual inflation rate declined to 4.7% in July, from 5.4% in the prior month, lending support to the PHP/USD forex pair.


US ISM services PMI fell to 52.7 in July, versus a four-month high of 53.9 in June, which sent the Dow Jones index lower by over 60 points on Thursday.


Brazil’s S&P Global Composite PMI declined to 49.6 in July, from 51.5 in the prior month. The figure also came below market expectations of 51.2 and sent the BRL/USD pair lower in forex trading this morning.


The Bank of England raised its policy interest rate by 25 basis points to 5.25%, lending support to the GBP/USD forex pair.

What else to watch today

Germany’s factory orders, new passenger car registrations and construction PMI, France’s industrial production, payroll employment in private sector and construction PMI, Spain’s industrial production, Eurozone’s construction PMI and retail sales, Italy’s construction PMI and industrial production, UK’s new passenger car registrations and construction PMI, Russia’s total vehicle sales, India’s foreign exchange reserves, Mexico’s auto exports, gross fixed investment and car output, US unemployment rate, nonfarm payrolls, average hourly earnings and Baker Hughes crude oil rigs, as well as China’s current account.


Site by Pink Green
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