Apple Sales Disappoint, Is This The Start Of A Bear Market?

Apple Reports Earnings

Apple recently had it’s earnings call after hours on November 1st. This is what lead to the drop in it’s stock price in after hour trading and then on Friday, November 2nd. For a struggling market, apple’s earnings report may have just been the nail in the coffin. As the rest of the tech market has shown, earnings themselves weren’t really the issue. Apple’s EPS (Earnings Per Share) slightly exceeded what most expected, but like Amazon, the sales disappointed. The problem with the sales figures is that Apple has now decided to stop providing sales volume. Without the exact number of sales, investors are getting concerned.

Why Hide The Data?

In the past, showing the number of products sold was used to display the massive success that Apple was becoming. Quarter after quarter, year after year, the number of phones sold continued to rise as smartphones became more popular, and with it, Apple. By only showing the earnings from sales, rather than including the number of units sold, Apple has essentially now proclaimed that their sales can’t keep up with their reputation. While the explanation given was that those numbers are “less relevant today than it was in the past”, their is no reason to exclude them unless they are a disappointment. While it may be smart to not show exactly how bad it is, there’s no way to prevent the panic from investors when Apple decided to keep this data hidden.

What About The Future?

Even if the numbers for this quarter were bad, we should be focusing on the future. The problem is that the future doesn’t look that great. According to Apple’s CEO, Tim Cook, this Christmas season might not be that great for sales either. This leads to a few questions, the first of which is whether or not Apple is beginning to struggle. I don’t think they’ve had any issue growing as a company in the past few years, but I do think a major shift has happened. Apple used to offer high quality AND affordable phones. With the newest lineup of phones starting at $999 that can’t really be said anymore. Plenty of smaller companies have filled the space that Apple used to occupy as they continue on to making more expensive premium products.

Do Premium Products Sell?

The thing to remember with premium products, is that the sales will be lower. There’s not nearly as many people looking for a $1000 phone as there are looking for a $400 phone. While this may seem like a bad thing, it’s really just a change in their target market. Premium products may sell less frequently, but they are much more profitable than a cheaper budget phone. This allows Apple to make the same amount of money, while selling less products. This also allows them to keep up their image as “the best” there is.

How Will This Effect The Stock Price?

While this change to offering premium products has happened over the last few years, it doesn’t change the fact that Apple was so worried about its sales this quarter that they decided to exclude them from their earnings report. This shows the fear that they have, rather than the strength of moving to a better market. With this disappointment and the likelihood of disappointment in the earnings report following this Christmas season, it doesn’t exactly provide a strong backing for a market recovery. While the stock will likely recover some from it’s latest drop, in the next few months we’re likely going to see the tech market continue to unravel as the market becomes more and more unstable. Eventually, this will lead to a much larger market correction/crash.

 


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