Apple Stock Falls After Strong Quarterly Results: Is It Time to Buy the Dip?
Apple (AAPL) shares have taken a hit following the company’s impressive fiscal third-quarter results. With investors now contemplating whether it’s the right time to buy the dip, Apple joins the list of notable companies, such as Crocs (CROX), that managed to beat expectations but experienced a stock drop regardless.
While Apple’s quarterly results were favorable, concerns over slowing growth in key business segments triggered the sell-off. Similar to Crocs, Apple faced a decline in sales growth for products like the iPhone, Mac, and iPad.
Despite this setback, Apple has had a strong year overall, prompting some to view the recent dip as a potential buying opportunity. In its Q3 earnings report, Apple surpassed estimates by 6% with earnings per share of $1.26, a 5% increase from the previous year. Although third-quarter sales of $81.79 billion slightly exceeded expectations of $81.36 billion, they dipped by 1% compared to the same period last year.
Since the quarterly report, Apple’s stock has fallen approximately 6%. iPad revenue experienced a significant drop of 20% from Q3 2022, while Mac revenue saw a decrease of 7% and iPhone revenue dipped by 2%. However, the Services segment of Apple’s business saw a positive outcome, with sales amounting to $21.21 billion, an 8% year-over-year increase and a new quarterly record. This segment includes services like Apple iCloud, Apple Pay, Apple Music, and Apple TV+.
While Apple does not offer official guidance, estimations from Zacks suggest that annual earnings for fiscal 2023 may decline by 1% but rebound and rise by 9% in fiscal year 2024, reaching $6.62 per share. Total sales are projected to decrease by 2% this year but stabilize and rise by 6% in fiscal year 2024, reaching $408.89 billion. Despite concerns surrounding slowing product revenue, it is noteworthy that the projected sales for fiscal year 2024 would still represent a growth of 48% over the past five years, with sales in 2020 amounting to $274.51 billion.
As of now, Apple stock holds a Zacks Rank #3 (Hold). While the slowdown in product segment sales remains a cause for concern, the promising growth in the Services segment offers some optimism. It may be too early to conclude whether buying the dip is the right move, but holding onto Apple stock at its current levels could prove rewarding, particularly for long-term investors.
To conclude, Apple’s recent dip in stock price following its strong quarterly results has left investors considering whether it presents a buying opportunity. While there are concerns surrounding slowing growth in certain product segments, Apple’s Services segment continues to perform well. The decision to buy the dip ultimately depends on individual investors’ long-term investment strategies and risk appetite.
