Apple’s Stock Jumps $40 (7.7%) in After-Hours Session

| Analysis

​Shares of Apple Inc. jumped 7.68 percent during the after hours session after Apple blew away its own guidance and Wall Street's consensus estimates. Trading in the after hours market is always exaggerated when it comes to $AAPL, but a sharp increase indicates that investors were pleased with Apple's results.

As of this writing, shares were trading at $565.03, up $40.28 (+7.68 percent). $AAPL ended the regular session at $524.75, down $6.949 (-1.31 percent), on strong volume of 9.1 million shares trading hands.

Apple reported several bullet points that traders took positively. Chief among them were record March revenues of $45.6 billion and earnings per share (EPS) of $11.62. Wall Street was expecting $43.54 in revenue and EPS of just $10.18. In addition, Apple reported gross margins of 39.3 percent, which also beat Wall Street's expectations of 37.5 percent.

Other good news included iPhone unit sales of 43.7 million, which blew past the 38 million units expected. CEO Tim Cook noted during opening comments that all of its iPhone models outperformed their predecessors in past quarters, a clear message to those who have erroneously called the iPhone 5c a mistake and/or a failure.

Mac sales also increased to 4.1 million, up from 4 million in the year ago quarter. This, in a quarter where the PC market as a whole declined year over year.

On the down side, Apple sold just 16.4 million iPads when Wall Street was expecting 19 million. Incoming Apple CFO Luca Maestri said that those results weren't as bad as they seemed because Apple reduced channel inventory by some 1.1 million units. Even taking that into account, Apple's iPad sales growth has stalled.

Still, it was a great quarter, but long time $AAPL watchers know that a good quarter is often not enough to satisfy investors, and that's because investors are often focused on the future. In this area, Apple turned in better than expected guidance of $36 to $38 billion in revenues with gross margins between 37 and 38 percent.

The last positive factor for $AAPL was an increased dividend and share buyback program, both of which return some of the enormous cash hoard that Apple possesses back to shareholders. At the same time, Apple announced a 7-to-1 stock split that could make shares of the company more attractive to a wider range of retail investors.

In short, Apple turned in an incredible quarter, but more importantly Apple guided better than many analysts were expecting. In addition, Apple CEO Tim Cook struck a very aggressive beat in his comments and made the case (without details) that his company was working on cool new products, would not release a product until it was ready, and that it was investing heavily in the future.

After hours investors reacted accordingly.

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

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Comments

ibuck

Will investors waiting for AAPL to hit $600 before they sell, see that happen before the split?

skipaq

I would expect that investors will hold for the most part. They get in on the split. Those looking to sell shares will likely look for an upward push after the stock is split.

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