Buy Apple Stock Despite Hiccups in Its Fourth Quarter





a group of people standing around a luggage carousel at an airport: Apple (AAPL) logo on an Apple store in Santa Monica, California.


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Apple (AAPL) logo on an Apple store in Santa Monica, California.

Apple (NASDAQ: AAPL) reported its much-awaited fourth-quarter earnings on “Super Thursday,” Oct. 29. The tech giant delivered a mild earnings beat, but some of its results came in lower than last year. As a result, AAPL stock was down almost 4% in after-hours trading that day. However, with the upcoming release of the iPhone 12 and other products in its 5G lineup, expect AAPL stock to gain plenty in the coming months.



Apple (AAPL) logo on an Apple store in Santa Monica, California.


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Apple (AAPL) logo on an Apple store in Santa Monica, California.

The relatively weak iPhone sales during the fourth quarter were primarily to blame for the underwhelming results. The delayed release of the iPhone 12 in China led to a 29% drop in sales in the country. However, it has had little impact on Chinese consumer interest in the phone, with healthy preorder numbers so far. The release of the iPhone 12 mini and iPhone 12 Pro Max in mid-November will boost sales during the holiday season and beyond.

An Underwhelming Fourth Quarter

Apple has had a solid track record of earnings with four positive surprises in the last four quarters. The company beat analyst estimates again this quarter, though by a relatively small margin. Apple posted revenues of $64.7 billion compared to estimates of $63.7 billion. Moreover, earnings per share were at 73 cents, beating estimates of 70 cents. Though revenues improved 1% year-over-year, profits declined 7.5%.

“Apple capped off a fiscal year defined by innovation in the face of adversity with a September quarter record, led by all-time records for Mac and Services,” stated CEO Tim Cook. Naturally, the results were weighed down by the delays in the release of the iPhone 12. The table below shows a breakdown of revenues by product in the fourth quarters of 2020 and 2019.



table: AAPL Stock Q3 revenues by product


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AAPL Stock Q3 revenues by product


Source: Muslim Farooque

From the table above, we can see that the revenues for most products have increased by double digits. The anomaly in the data is the iPhone sales, which dropped 21%. The iPhone 12 and iPhone…

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