Apple has always been in the limelight when it comes to quarterly results, and its fiscal 2023 third quarter results were no different. Announcing a quarterly revenue of $81.8 billion, a 1% drop year over year, it raised eyebrows in the financial world. Despite this slight dip in revenue, the earnings per diluted share rose by 5% to $1.26. It's clear that while Apple may not have seen the explosive growth investors had grown accustomed to, they still managed to slightly exceed Wall Street's sales and profit expectations for the quarter.
However, the market didn't respond with the same optimism. Following the announcement, Apple’s shares slid by 2% in after-hours trading, with the decline continuing into Friday's session. Although there was an acceleration in iPhone and software sales, it was overshadowed by the double-digit decline in the sales of Macs and iPads. The repercussions? The stock price took a hit, dropping to its prior all-time high of $182.5.
It's noteworthy to mention that this occurred after AAPL had just surpassed its previous record, reaching a peak of $198.3 in July 2023. So, given this fluctuating scenario, where might Apple's stock be headed?
AAPL, daily chart
Analyzing the Possible Outcomes:
Bullish Scenario:
If AAPL witnesses an influx of buy-the-dip buyers early next week, it could be the beginning of a bounce-back. This would suggest a successful re-test post the breakout. Historically, there have been instances where stocks retest their old highs before establishing a new bullish trend. If this happens, investors who believe in the long-term potential of Apple might see this as a buying opportunity, hoping to capitalize on potential future gains.
Bearish Scenario:
On the other hand, if AAPL's price continues its descent next week, we could be observing a classic Bull Trap. This means that the stock might remain bearish for an extended period, potentially weeks or even months. To get a historical perspective of the bearish scenario, one can look back to 2012. AAPL's stock price displayed a similar pattern. After surpassing its previous all-time high of $23 in August 2012, it achieved a new record of $25.1 in September. Yet, post the earnings report, the stock price not only dropped below its old high but continued to slide for the next six months.
AAPL, 2012
While past performance is not indicative of future results, understanding historical patterns can provide investors with insights and possible strategies. Regardless of the direction AAPL takes, it's essential for investors to remain informed and make decisions based on both the company's fundamental performance and broader market conditions. Only time will tell whether Apple's stock will replicate its 2012 behavior or carve a new path forward.