After Hours: AAPL Drops 5.6% Following Q4 Earnings

| Apple Stock Watch

Despite having turned in a record September quarter Monday, shares in Apple Inc. dropped 5.6% in After Hours trading after the company released those results. The stock was trading at US$299.70, down $18.30 (-5.75%), not quite two hours after the announcement.

Apple turned in record revenue ($20.3 billion), earnings ($4.34 billion), Mac (3.9 million), iPhone (14.1 million), and iPad sales (4.19 million), and Apple guided for revenue of $23 billion for the December quarter, but after-hours traders weren’t having it and pushed the stock down.

For AAPL observers, however, the context is the stock had a major run-up in the weeks leading up to Monday’s announcement, and that’s coupled with the fact that Apple’s after hours trading following an earnings announcement tends to be more exaggerated than the regular session trading that takes place the following day.

To wit: AAPL ended the day on October 4th, 2010 at $278.64 and closed Monday (ahead of the earnings report) at $318.

You can find more detailed coverage of Apple’s conference call with analysts in our live coverage of that call.

*In the interest of full disclosure, the author holds a small share in AAPL stock that was not an influence in the creation of this article.

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21 Comments Leave Your Own

Tiger

Just think if they’d had more iPads to sell how many could have been? The aggressive sales in this next quarter at WalMart, BestBuy, Target, AT&T, and Verizon stores should be very interesting indeed!

Bennyboy

check out after hours trading.

Lee Dronick

check out after hours trading.

I just checked and it was $298 and change. These dips always seems to happen after a quarterly report, but the overall trend is up over the last two years.

Josh

Do you guys believe that this is a after-hours-only drop and we’ll see 310+ tomorrow again?

Lee Dronick

Do you guys believe that this is a after-hours-only drop and we?ll see 310+ tomorrow again?

I am not knowledgable enough about the market to say, but AAPL has been trending up. Also Apple is having a press conference soon to announce something that is probably a new product and or service. Maybe not tomorrow, maybe it will be back up in a few days.

Buy low, sell high

Josh

I don’t really get how these markets work (technically I get it because I am an economist). They are well above “analyst expectations” and still the share drops “massively” in after hours trading. Makes no sense to me. Probably a similar issue as with the silver-and-gold-conspiracy… these market-maker-guys just lost connection with the real world. Hopefully one days all markets crash really hard - world wide. All of a sudden companies that actually sell products (like Apple) and stuff with real value (like silver and gold) will actually be traded on stock markets at “fair value” and not some analyst-whatsoever-expectations-limbo-b…s..t wink

Twitcher

@Josh: Share prices don’t just look at current events - instead, they look at expectations of future events.  Based on current earnings, Apple shares are currently very “overpriced” by all usual metrics - in other words, the price is where it is because investors are betting that there’s significant company growth ahead.

So something about this news has caused a number of those investors to rethink that growth - the market was betting on higher growth, higher margins, higher Mac growth, or higher iPad sales.  It could be anything - maybe a number of investors were thinking of the rumoured 7” iPad, and Jobs’ comments have scotched that.

After-hours trading can be a weird one though - there’s fewer trades being recorded, so it may be magnifying movements.  They’ll probably result in a dip tomorrow though; but who knows what else will happen!

FAHAD

red just on open and close the gap after that will green close

xpertcomment

Make sense . After GOOG quarterly report stocks run up high with unusual volume. APPL,AMZN already priced in earnings as of Friday. on Top of that IBM the white elephant slowed down and panicked the markets.
My guess is tech stocks and NASDAQ will under perform broad markets in second half of October!!

Bosco (Brad Hutchings)

Steve overplayed his hand with the victory lap. There are a lot of problems with that, chief among them his tight grip over the company vision. Make great products and be insanely profitable. But don’t be an ass about it. He provided a year’s worth of bulletin board material for Google and its market partners in 5 short minutes.

other side

AAPL was in a bubble anyway.

other side again

He provided a year?s worth of bulletin board material for (his competitors and their) market partners in 5 short minutes.

The last time a CEO accomplished that was Ballmer’s “Developers! Developers!” disaster.

Lee Dronick

AAPL was in a bubble anyway.

No, it is in a walled garden.

Bugsy

“Share prices don?t just look at current events - instead, they look at expectations of future events.  Based on current earnings, Apple shares are currently very ?overpriced? by all usual metrics - in other words, the price is where it is because investors are betting that there?s significant company growth ahead.”
———
Apple is cracking the Verizon market, starting next week with it’s first offering:VERIZON ipad. A Verizon iphone is coming early 2011. New product announcement in the next week or so.
That is what I call “significant” growth ahead.
What Jobs was saying today was that even though Android is Apple’s leading competitor, Apple is situated to greatly increase sales in the next year, given the unexpected rush by business to the ipad and the monstrous potential of the Verizon market. Android does well because it sells numerous phones over several different systems; soon, so will Apple.

firestorm

Apple is emphatically NOT in an overpriced stock bubble. The major metric used to compare stocks, the price/earnings ratio, is modest for an energetically growing high tech firm.  Look at Amazon, which has a P/E nearly three times as high as Apple, for a firm that I believe is overpriced.

Constable Odo

So, Google is undervalued and that’s why it was able to run up so easily ($60) after earnings and then jump up again the next day ($12) after an analyst said he gave a target price of $700.  In other words, it’s agreed that Google is worth every penny at $650 a share and Apple isn’t worth $300.  It sort of seems like that.  Is it that Google has unlimited growth with Android yet Apple doesn’t?  I’m only making an observation of how Apple’s share movement appears to me.

wab95

I don?t really get how these markets work (technically I get it because I am an economist).

As an economist, I am sure that you appreciate how much psychology, specifically, herd mentality, goes into market dynamics. It is fundamentally irrational. That this drop in stock price is being pinned on a below-par performance on iPad sales (4.19M vs 4.5 - 5M as expected by the Street), while Apple otherwise beat expectations all around, is irrational, but an opportunity for investors to buy.

Lee Dronick

Android does well because it sells numerous phones over several different systems; soon, so will Apple.

I think that it sells well because it isn’t Apple. There is some real rabid anti Apple attitudes out there, especially among tech types who want the Wild West where there are no garden walls. There is also some strong anti AT&T feeling.

Anyway, it am betting that it won’t be a “Versizon iPhone/iPad” as much as it will be an iPhone/iPad that runs on the Verizon network. No Verizon labels and all of that crippled device stuff.

aardman

I think there are a bunch of players in the market who stoked AAPL to a frenzy in the last few days then happily cashed out yesterday at 300-and-teens.  And the analists didn’t help by trying to outdo each other on who can come up with the biggest pie in the Apple sky earnings forecast.

I pity the poor schmucks who surrendered their (or their clients’) hard earned income to the wise guys.

Never, never invest in a stock if you are not willing to watch that company continuously and closely.

Lee Dronick

Well it is currently back up over $300 and seems to be rising, $306.15 when I last checked.

BurmaYank

Well it is currently back up over $300 and seems to be rising, $306.15 when I last checked.

AAPL: $311.94, 2hrs. 20min. later.

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