After Apple reports earnings, the stock usually rises. This time, however, things might be different

After a rough quarter for the technology giant, Apple AAPL +3.71% will report earnings Thursday after the markets close, and shareholders may be wary that the stock won’t do as well as it has in the past.

Dow Jones Market Data shows that since 2007, when the first iPhone was released, Apple stock has risen by an average of 0.3% in the trading session immediately preceding the announcement of the company’s quarterly earnings.

Although it may not seem like much, the average increase in the stock price is 1.1% in the trading session after the release. Furthermore, the stock has risen by an average of 2.3% in the month following earnings. On the other hand, this Thursday may look different than others.

These past few months have been trying for Apple. A tight Covid-19 lockdown was instituted in 2022 at the company’s largest iPhone factory in China. That hampered manufacturing of the new, more expensive iPhone 14 Pro and 14 Pro Max. Although China has reversed its zero-Covid policy, there is certainly been some damage.

BofA Securities analyst Wamsi Mohan said in a research note last week that “this supply constraint likely severely impacted iPhone unit sales,” with some demand likely being pushed into [the March quarter] and other demand lost owing to lack of product availability in the holiday period.

The iPhone is Apple’s most profitable product. Apple’s fourth fiscal quarter saw revenue of $90.1 billion. Sales of iPhones accounted for $42.6 billion of that total.First-quarter iPhone sales are expected to reach $67.8 billion, according to analysts polled by FactSet, which is lower than the $71.6 billion recorded in the same period last year.

 

Evercore ISI analyst Amit Daryanani predicts that Apple’s stock price might fall as much as 5% if iPhone sales fall short of expectations, but that the company can keep investors happy in other ways by communicating this on Thursday.

Earlier, we predicted that the manufacturing shutdowns would reduce iPhone unit sales by around 8 million in the December quarter, which might lead to a negative comparison with the sales of iPhones manufactured for regular sale.

 

Given the decline, Daryanani said on Monday that he didn’t expect a miss to have much of an effect on Apple’s stock price “as long as Apple provides a forecast that implies they plan to recover the lost sales as we progress through FY23.”

Demand could be harmed by the present economic recession. The cost of living is still rising, and Apple makes high-end goods, so inflation is a real concern. We may learn on Thursday if consumers are choosing not to spend their money on Apple items because of rising prices elsewhere. Personal computer sales have also been falling.

Apple’s stock price increased by 0.8% on Wednesday, ending the day at $145.43.