7 Reasons Why $AAPL Jumped 5.5% on Apple's Earnings Report

Shares of Apple Inc. jumped more than 5.5 percent on Wednesday in the wake of the company's third quarter earnings report on Tuesday. Investors were cheered by the news that Apple sold more than 31 million iPhones during the June quarter, well above even the most optimistic analyst projections. The company's guidance was also taken as an encouraging sign by investors.

In the early afternoon session, $AAPL was trading at US$442.32, a gain of $23.33 (+5.57 percent) on heavy volume.

AAPL Chart

Source: Yahoo! Finance

Long-time $AAPL observers may be surprised by Wednesday's action. In the past, Wall Street has often run Apple's stock up ahead of its earnings report only to send it back down the next day. Things are different this time for a number of reasons.

1.) $AAPL has been beat down, and then some. Even with Wednesday's gain, the stock is trading 37 percent down from the all time closing high of $702.10 set in September of 2012. Such dramatically different circumstances mean that Wall Street's preconceptions and perceptions are different—investors look at the company's results differently.

2.) Expectations for Apple have been dramatically lowered as wave after wave of doom and gloom about Apple has emanated from the mainstream and tech press.

3.) Apple CFO Peter Oppenheimer stopped sandbagging guidance. For more than a decade, Mr. Oppenheimer and his predecessor, Fred Anderson, offered laughably low guidance that Apple then proceeded to crush. It became a parlor game to see who could offer the highest estimates above that guidance, and that practice eventually caught up to Apple when the iPhone 5 launch stumbled.

Tuesday marked the third quarter of Mr. Oppenheimer's new policy of offering guidance in a range that Apple is likely to hit. For real, this time, and it has taken Wall Street some time to adjust.

4.) Apple beat estimates. The company's results of $35.3 billion in revenue and $7.47 in earnings per share (EPS) were higher than the $35 billion and $7.30 analysts had expected. Apple also showed a slight revenue gain, as the company turned in $35 billion in revenue in the year ago quarter.

5.) iPhone numbers were off the charts. Apple turned in a record June quarter for iPhone sales of 31.2 million iPhones. A record quarter when everyone is talking about how dead the iPhone is? Come on, that's pretty rad. You can tell because the Apple haters have been quiet in the 18 hours since this announcement.

Plus, analysts had been expecting just 26.6 million units. Contrast that with disappointing sales of the Galaxy S4 from Samsung, and you get happy $AAPL investors.

6.) Apple's guidance of between $34 billion and $37 billion for the September quarter wasn't stellar, but at the high end, Apple would beat the year ago quarter ($35.97 billion). The median of $35.5 billion is just below last year's Q4 sales, but the real point is that Apple's guidance suggests the company doesn't expect a slowdown in iPhone sales ahead of the next refresh.

7.) It didn't hurt that Maynard Um told clients Wednesday morning that he believes Apple will launch the next iPhone on September 27th, which will put three days of sales of the new device in the current quarter.

Those are a lot of positives in terms of investor outlook, and some of them run directly contrary to the meme that iPhone is old hat/sucks/is dying/etc. Call it a perfect storm of factors for $AAPL to post sharp gains.

Had iPad numbers been better—Apple sold 14.6 million iPads, while analysts expected 17.6 million units—$AAPL could have done even better.

As it is, analysts and investors alike appear to have taken Tim Cook's comments that year-over-year is a "tough compare" because Apple released the iPad 3 in the year-ago-quarter as an "Oh, right," kind of thing. That may be the biggest sign that investors are thinking differently about Apple.

*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.