AAPL stock still falling, but Wall Street expecting another record quarter

AAPL stock is still falling a couple of days ahead of the company’s earnings report, but Wall Street is expecting another record quarter.

AAPL has fallen from just under $183 earlier this month, when the company hit a $3 trillion market cap, to $158 today – falling a further 2%+ just this morning …

Why AAPL stock continues to fall

The large slide in the value of AAPL stock this month has less to do with the company itself, and more to do with macroeconomic factors around the economy as a whole, and the tech sector in particular.

The US Federal Reserve is expected to raise interest rates in order to slow inflation, as well as ending pandemic stimulus measures. This would mean consumers have less disposable income, as well as making it more expensive for companies to borrow to fund future product development.

Bond yields have risen, making them a more appealing alternative to investing in stocks. Additionally, the growing tension over Russia and Ukraine has added to existing investor nervousness over the possible impact of the Omicron variant of COVID-19.

All this has seen stocks slide across the market, with the chip shortage yet another factor for tech companies. Finally, slowing Netflix growth has created concerns about subscription fatigue for tech services.

But another record AAPL quarter expected

For Apple specifically, Wall Street is expecting the company to report another record quarter – and Seeking Alpha says that long-term trends are also extremely positive.

All told, consensus analysts expect Apple grew revenue by 7% over last year in the incoming earnings report. It is a significant deceleration due to the tough comparisons. But 7% is very healthy for a business at AAPL’s scale, and it will bring sales to another quarterly record of $119.3 billion […]

AAPL investors have been spectacularly rewarded in the past. The stock delivered about 1161% of total return (assuming dividend reinvestment) over the past decade, translated into a whopping CAGR of 28.9%, beating the overall market by a large margin […]

The growth rate [I expect] to be somewhere near the upper single-digit range (say around 7.5%) and higher than the wall street consensus […] The expected return would be about 7.5% to close to 10% in the next 10 years [and] it is likely that the stock can deliver the high end of the return.

Though the stock price may not rise

The macroeconomic factors still apply, and most analysts think the expected record results are already priced into the stock, so we won’t necessarily see an immediate rise this week.

Investors will be keen to hear what CEO Tim Cook has to say about the current quarter, but the company has declined to offer guidance of late due to the supply chain and other pandemic uncertainties, and this is unlikely to change when Apple reveals its holiday quarter earnings on Thursday.

Photo: Dylan Calluy/Unsplash