Apple's post-earnings performance: volatility and trends analysis

(AI summary)

Peeling back the layers: Apple’s revenue boost from services and wearables

Apple's business centres on the iPhone, but its services portfolio—including the App Store, Apple Music, Apple Pay, and cloud services—has become a key revenue source. Non-iPhone products like the Apple Watch and AirPods have also gained popularity, dominating the Wearables and Hearables markets.

This article examines Apple's historical share price movements across various periods following earnings announcements, providing valuable insights for investors and traders.

Key metrics

Q3 performance

• Revenue: $85.8 billion
• Revenue growth: 4.91% year-over-year (YoY)
• Net profit: $21.4 billion
• Earnings per share (EPS): $1.40
• Dividend per share: $0.25

Comparison to Q2

• Revenue: $90.75 billion
• EPS: $1.53
• Estimated EPS: $1.50

Post-earnings performance analysis

• Immediate reactions (one day)

The one-day reactions following earnings reports show significant movements, reflecting how quickly investors process new information. For instance, after the third quarter (Q3) 2022, Apple shares surged 7% in just one day, while the second quarter (Q2) 2023 saw an even larger 9% increase immediately post-earnings. These spikes indicate strong initial optimism from investors.

However, not all immediate reactions were positive. In the first quarter (Q1) 2023, the stock dropped 7% one day after the earnings release, suggesting a more cautious or negative response to the financial results or outlook.

• Short-term adjustments (one week)

Apple's stock often adjusts further. After sharp one-day reactions, share prices either continue to rise or experience pullbacks. For example, following the fourth quarter (Q4) 2022, Apple stock saw a one-week gain of nearly 10%, showing sustained investor confidence. In contrast, after Q3 2023, the stock fell by 7% within the first week, reflecting a more negative short-term reassessment.

• Medium-term trends (one month)

Trends start to stabilise as the market fully processes Apple’s earnings and future guidance. Both Q3 2022 and Q4 2023 saw steady growth across the month, reflecting continued confidence from investors. The Q2 2024 earnings were especially notable, with Apple’s stock rising 9% over the month, signalling a strong long-term outlook.

However, in some quarters, such as Q2 2023, initial gains were followed by declines over the medium term, suggesting a more cautious or tempered sentiment after the initial excitement wore off.

• Overall patterns

Apple's post-earnings share price movement shows distinct volatility, with sharp responses in the first day and week, often followed by more stable medium-term trends. While 2022 mostly saw consistent gains post-earnings, 2023 presented a more mixed performance, with both gains and losses depending on market sentiment. In 2024, there appears to be renewed investor confidence, as evidenced by the strong, sustained growth seen in Q2 2024.

• Implications for investors

For investors, Apple’s post-earnings volatility offers both risks and rewards. Immediate spikes may lead to short-term gains, but caution is advised, as medium-term trends can reverse. Long-term investors should focus on broader trends and market conditions for a balanced view.

Apple's post-earnings performance chart

_{Note: Q2 2022 data is not included.}