Apple stock (NASDAQ: AAPL) became the first to exceed a $1 trillion market capitalization last year, but the celebration was short lived with share prices sinking during the last quarter. Some analysts warned that there would be worse to come, fearing that earnings would be less than predicted.
Unfortunately for short-term traders, the analysts weren’t wrong, and Apple stock dipped 8% on Wednesday. It is now the third most valuable company on the stock market behind Microsoft and Amazon.
Tim Cook Confirms Disappointing Holiday Revenue
Apple’s fiscal year ended in September, so the holiday season of 2018 was their first quarter of the current cycle. Original revenue expectations for the quarter were $93 billion. Apple has now changed their guidance to $84 billion.
In a letter to investors, CEO Tim Cook pointed to economic slowdown as the key factor in the revenue shortfall.
He told investors that “While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China. In fact, most of our revenue shortfall to our guidance, and over 100% of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad.”
Cook also cited some other smaller factors that contributed to lower revenue, including a stronger U.S. dollar, and lower carrier subsidies for Apple products in North America.
Almost Half of Top Analysts Still Recommend a BUY Rating
Despite what sounds like very bad news for Apple and its investors, there are still analysts who believe in the stock. According to FactSet, a leading financial data firm, 20 of the 42 top level analysts still give Apple a BUY rating. Not a single analyst is below the HOLD line today.
These analysts believe that today’s lower price is a relative bargain. Buying now could allow for strong growth if holding stock long-term.
Apple is expanding its business and reinvesting in the United States with new facilities and thousands of jobs. Stock price doesn’t always reflect the true potential of a company, and Apple is still one of the world’s most powerful brands.
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