Tech & AI
Apple slides after hours despite beating revenue forecasts
Apple's quarterly revenue and profit beat analyst estimates, yet its shares slid after hours. The move could weigh on the S&P 500 and Nasdaq-100 funds in many retirement accounts.
Quick Read
- Apple's fiscal fourth-quarter revenue and earnings per share both beat analyst estimates, yet the shares slid 2.8% after hours.
- CEO John Ternus said iPhone set a September-quarter record and Services revenue hit an all-time high.
- Apple's market value of $4.9 trillion gives it heavy weight in S&P 500 and Nasdaq-100 funds.
- After-hours moves often shrink or reverse once the regular session opens.
What did Apple report?
Apple (Nasdaq: AAPL) shares slid 2.8% in after-hours trading Monday, to $328.81. The drop came after the company released quarterly results that beat forecasts. After-hours trading takes place once the regular session closes, with far fewer buyers and sellers, and prices can swing more.
Why it matters: Apple reported fiscal fourth-quarter revenue of $114.48 billion, against analyst estimates of $113.39 billion. Earnings per share, the company's profit divided by its share count, came in at $2.10, against analyst estimates of $1.98.
CEO John Ternus said iPhone set a September-quarter record and Services revenue reached an all-time high. The company said its installed base of active devices also hit a record. iPhone and Mac sales grew from a year earlier. iPad and wearables sales shrank.
Why did the shares fall after a beat?
The results themselves give no clear reason for the drop. One open question is whether buyers had already priced in a strong quarter, since the stock went into the report near its peak.
The selling also started before the release. Apple closed the regular session at $338.32, down 1.8% from $344.63. That left it 3.0% below its 52-week high of $348.91. Apple lost $92 billion in market value on the day.
Management held an earnings call after the release. Apple usually comments there on how it sees its product lines performing, and those remarks could shape Tuesday's trading.
What does this mean for index funds?
Apple's market value of $4.9 trillion makes it one of the heaviest weights in S&P 500 and Nasdaq-100 funds. Both indexes weight companies by size, and a move in Apple travels further than one in a smaller company.
Monday's regular session showed that pull. Most stocks rose: advancers outnumbered decliners, 666 to 426. Yet the technology sector fund slid 2.9%, and the Nasdaq-100, an index of large Nasdaq stocks that leans on tech, slid 1.4%. The S&P 500 fell 0.5%.
On $100,000 in an S&P 500 fund, Monday cost $510. Prices set in thin after-hours trading often shrink or reverse by the next open. Tuesday's regular session is the next test of whether this one holds.
For readers
What it could mean for you: If your 401(k) or IRA holds an S&P 500 or Nasdaq-100 index fund, you own a slice of Apple sized by its market value. A lower Apple price at Tuesday's open could pull on those funds even if most other stocks rise. Monday showed this. The Dow Jones Industrial Average rose 0.4%, but the S&P 500 fell. If the after-hours drop fades, the drag on those funds could fade with it.
Questions and answers
Did Apple beat earnings expectations?
Yes. Apple reported revenue of $114.48 billion against analyst estimates of $113.39 billion, and earnings per share of $2.10 against estimates of $1.98.
Why is Apple stock down after earnings?
The results offer no clear reason for the after-hours drop. The stock had already slid 1.8% in regular trading Monday and sat near its 52-week high going into the report.
How does Apple stock affect an S&P 500 index fund?
The S&P 500 weights companies by market value, and Apple's $4.9 trillion value makes it one of the largest holdings. A move in Apple reaches the fund in proportion to that weight.
The numbers
| Apple (AAPL) price | $338.32 |
|---|---|
| Apple (AAPL) change | −1.83% |
| Apple (AAPL) market value | $4.9 trillion |
| Apple (AAPL) 52-week high | $348.91 |
| S&P 500 change | −0.51% |
| 10-year Treasury yield | 4.91% |
Monday’s close
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Not investment advice.
