Apple Stock Sinks on First-Quarter Earnings Numbers
Feb 3, 2023
Apple traded lower in extended hours trading after the iPhone maker reported a revenue drop from the same period a year ago. Its first-quarter fiscal results crossed the wires after the NY closing bell, reporting revenue of $117.2 billion and earnings per share (EPS) of $1.88 on a diluted basis, according to financial statements.
The revenue fell 5% from the same period a year ago despite strong services business revenue of $20.8 billion, which was a record for the growing segment. Apple CEO Tim Cook stated that the user base grew to over 2 billion active devices, marking a key milestone for the fiscal first-quarter.
While investors sold shares after the report, the company’s performance metrics are rather impressive considering the market’s relatively mild valuation of the tech company, currently trading with a PE ratio of around 23.6. Apple generated $34 billion in operating cash flow. The board of directors announced a $0.23 per share dividend, extending its solid streak of returning cash to shareholders.
Apple stock traded 3.71% higher in cash hours trading, outperforming the nearly 2% gain in Nasdaq futures (/NQ), but surrendered those gains in after-hours trading, dropping about 4%. The stock market has traded higher since the Federal Reserve announced its interest rate decision on Wednesday when Chair Jerome Powell came off as comparatively dovish to what investors expected. All eyes are now on the conference call this afternoon.
That said, the after-hours reaction in Apple trading may be an overreaction or attributable to some profit-taking following a multiple day rally. Markets may trade higher amid an extended risk-on move as post-FOMC optimism continues. If so, traders may want to go long on directional risk through long call options since implied volatility has now collapsed after the earnings announcement.
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