Apple posted some impressive numbers this afternoon in their earnings report for their fiscal first quarter (final quarter of last year to you and me) including record quarterly revenue of $57.6 billion, and the sale of some 51 million iPhones and 26 million iPads. The result? Apple stock promptly dropped some 5% in after hours trading, ending the evening at $506, an 8% drop from Apple's closing price of $550.50
Why the drop? It's all about expectations, specifically, Apple not meeting the expectations of the analysts that cover it in several key metrics. First up: iPhone sales. The average analyst consensus was that Apple would sell 55M iPhones. They sold 51M. Yeah I know you'd think that instead of whipping Apple's share price they'd be whipping their own backs over just how bad they are at predicting these things while getting paid to advise clients on buying Apple stock, but that's not how it works for some reason. Up next: Current quarter guidance. Apple expects revenue for this quarter to be between $42-44B, that's essentially flat year over year (Q2 2013 reported $43.6B), but more importantly that guidance is 6.5% lower than what analysts were hoping for. Finally, Apple's quarterly net profit of $13.1B was also flat year over year with Q1 2013 (also $13.1B). Taken together, analysts and investors had enough “no-growth” jitters to dump shares and CNBC pundits have their “is Apple still a growth stock?” story to tell for the next three months.
So yes, Apple broke records, and met or beat their own expectations. Unfortunately though, well paid analysts got their numbers wrong, and for that Apple stock, and those analysts' bullish clients, have to pay.