Apple stock gapped lower on Tuesday as investors reacted to its earnings report, which showed that its growth was stalling. AAPL fell to $325, its lowest level since October 1 and 7.5% from its highest point this year. This sell-off may be an overreaction as the company is doing better than other Magnificent Seven companies.
Apple Stock Falls as Earnings Slowed
AAPL stock has been in a strong sell-off in the past few days, moving from a high of $351 to $325 today. This retreat continued after the company delivered its earnings report, which showed that its revenue and profits rose in the quarter.
Its revenue jumped to $114 billion, driven by its products division, which made $82.9 billion. Its services revenue soared to a record high of $31 billion, and $123 billion in the twelve months to September.
Apple’s net profit rose to $30.7 billion and $132 billion in the quarter and twelve months to September, respectively. Despite this growth, the management cautioned that its high-margin business was losing momentum, while the gross margin would continue slowing.
One key reason behind the slowdown is the ongoing memory crisis that has affected its products. As a result, it has been forced to hike prices, which has impacted its growth. Still, in this regard, Apple is doing better than other companies like OPPO and Xiaomi.
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Apple is working to boost its product sales. It recently launched its folding smartphone whose sales have surged such that it is hard to get it. It has also launched updated MacBooks.
Another key challenge that Apple is facing is that its iPad business continues slowing. Its iPad revenue dropped to $6.2 billion from $6.9 billion in the same period last year. This retreat will likely continue as the value of iPads continues to fall.
On the positive side, unlike other Magnificent 7 companies, the company is making billions of dollars in free cash flow. That’s because the company has not invested billions of dollars in the AI industry.
Apple Shares Technical Analysis
AAPL stock chart | Source: TradingView
The daily chart shows that the AAPL shares have been in a strong upward trend in the past few months, turning it into the biggest company in the world. It formed an ascending channel and has dropped below the lower side.
The MACD indicator has formed a bearish divergence pattern. Also, the Relative Strength Index (RSI) has dropped below the neutral level. Therefore, the stock will likely drop to $320 and then bounce back, possibly to its all-time high of $351.
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The post Apple Stock is Cratering After Earnings: Is it Safe to Buy the Dip or Sell the Rip? appeared first in UK on InvestingCube .
