Analysts expect the day before the Cupertino-based company publishes AAPL earnings for the third quarter of 2022, the company’s pandemic-driven growth will come to an end.
Under the new normal, the company has not released any guidance for the fiscal quarter given the ongoing supply disruptions as China continues its COVID Zero policy…
Background
Apple’s earnings lately have been a battle between supply and demand. On the supply side, the Cupertino-based company has experienced a number of production disruptions due to the COVID quarantine. On the other hand, demand has increased due to increased technology spending during the pandemic and a brand new generation of Apple Silicon Macs.
Demand has been winning so far and the company has enjoyed a series of record quarters. For example, back in April, Apple reported $97.3 billion in revenue, up 9% from last year. CFO Luca Maestri said at the time that the company had achieved record revenues in almost all product categories.
We are very pleased with our record-breaking business results for the March quarter as we set service revenue records and March quarter revenue records for iPhone, Mac, and wearables, home products, and accessories.
Apple has reported revenue growth in each of the past dozen quarters since the second quarter of 2019.
AAPL 2022 Q3 Earnings Stabilize – Analysts
Yahoo Finance has its usual round of analyst expectations. The range of FY3 revenue projections is huge, from $79.26 billion at the bottom to $88.41 billion at the top.
However, the 26-analyst average is $82.81 billion, representing only 1% year-on-year growth, which remains virtually unchanged.
The site says a strong dollar and declining sales in Russia are other factors.
Apple expects COVID-induced supply chain disruptions and industry silicon shortages to hurt revenue by $4 billion to $8 billion, much higher than in the second quarter of fiscal 2022. The unfavorable exchange rate is also expected to reduce earnings by 300 basis points. (bps). Lack of Russian revenue will hurt revenue by 150bp. [1.5%].
A strong dollar means Apple must either raise the price of products in other countries or lower its margins.
The fact that Apple opened iPhone discounts in China – a first for the company – just a couple of days before the earnings announcement suggests that it may be trying to create some iPhone growth news to make up for the previous quarter’s lack of it.
Seeking Alpha notes that someone is betting big that Apple’s stock price will drop after tomorrow’s earnings announcement, and the technical data supports that claim.
The stock is trading like everything is in order and nothing can go wrong when the company reports results. […]
The trader is betting that Apple will trade lower after the results. On July 25, open interest in the $140 puts from July 29 rose by about 16,600 contracts. [This] would mean the stock will trade below $139.55 by its expiration date later this week. Considering the short time frame of this trade, this is a fairly large bet: a trader pays around $800,000 in premium to place a bearish bet. […]
Apple’s technical chart suggests that the stock could fall after hitting technical resistance at $156.65. The RSI has been trending down for some time, making a series of lower highs and lower lows. This suggests that the momentum is very bearish. If the stock falls below the support at $152, then there is a chance it could drop to $139.60.
If AAPL’s earnings fall short of expectations, it could mean that traders will be nervous about the tech sector as a whole, leading to a decline in the NASDAQ.
Photo: Adam Nowakowski/Unsplash
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