How can Wall Street suddenly turn against a “Magnificent Seven” company like Apple (NASDAQ:AAPL)? Analysts and investors can be fickle, but this only presents a dip-buying opportunity with AAPL stock that you might not see again for a while.
An argument could be made that Apple’s quarterly reports are the most closely watched ones in any given earnings cycle. Expectations were unusually high for this year’s second quarter, especially when it came to Apple’s smartphone sales.
When financial traders expect too much from a company, they can behave irrationally. This doesn’t happen very often with Apple, so now’s the time to capitalize on the market’s unreasonable response to quarterly stats that actually weren’t all that bad.
AAPL Stock Pulls Back and Gets Downgraded
It’s funny how many people think they’ll want to invest in Apple as soon as the share price pulls back. Then, when this finally happens, they’re too afraid to pull the trigger.
Dip-buyers had their opportunity recently when AAPL stock pulled back from nearly $200 to $177 and change. This happened in the wake of Apple’s third-quarter earnings report.
Traders dumped the stock, and all of a sudden, analysts didn’t like Apple anymore. For instance, Rosenblatt Securities analyst Barton Crockett downgraded Apple shares from “buy” to “neutral,” claiming that Apple now “sits” in a “slowdown phase.”
In another example, analysts with Bespoke Investment Group expressed concerns that the decline in AAPL stock could lead to a deeper drawdown. “The drop has done a lot of technical damage in just a few trading days,” they warned.
Apple’s Results Weren’t Terrible
From a technical perspective, it’s difficult to predict the future direction of the Apple share price. Suffice it to say, Apple’s investors have always won sooner or later while the short sellers lost their shirts.
Mainly, the post-earnings drop in AAPL stock is due to unreasonably high expectations for Apple. Critics and commentators might enjoy declaring the demise of Apple, but in reality, the company’s quarterly iPhone sales were only down 2.4% year over year.
That’s not terrible, considering inflation was still quite elevated during the reported quarter. Furthermore, Apple’s revenue of $81.8 billion was only down 1% year over year and was roughly in line with Wall Street’s estimate.
Additionally, Apple reported earnings of $1.26 per share, beating Wall Street’s call for $1.19 per share. To me, the bottom line is truly the bottom line, so I’d say Apple had a successful quarter overall.
AAPL Stock: Buy Now or Be Sorry Later
I strongly encourage investors to check the actual data instead of basing their assumptions about Apple on market sentiment. After all, Apple share-price dips are meant to be bought, even if it’s psychologically difficult to do so.
The reality is, Apple beat the analysts’ consensus earnings per share (EPS) estimate. That’s important, and I expect Apple to succeed long term like it always has done. If you agree, then feel free to take a buy-and-hold position in AAPL stock.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
