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Apple’s Stock in a Tough Spot after the Disappointing Q3 FY23 Results

Nikos Tzabouras Written by Nikos Tzabouras
  • AAPL.us
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AAPL.us Analysis

Apple released its results for the quarter ended July 1 (Q3 FY2023) on Thursday after markets closed. The star of the report was the Services segment, which includes AppleTV+ and AppleMusic, since sales reached record highs of $21.213 billion. CEO Tim Cook also touted "continued strength" in emerging markets, due to "robust" iPhone sales. [1]

This is pretty much were the good things stop, from a release that largely disappointed markets. Sales of Macs, iPads and iPhones, all dropped compared to the year ago quarter, with Mr Cook speaking of a currently "challenging" smartphone market in the US during the earnings call. [2]

Overall Revenue dropped nearly 1.5% y/y $81.797 and the lowest levels in almost two years. Forward guidance was not inspiring either, since CFO Luca Maestri expects the current Q4 FY2023 to have "similar" year-over-year revenue performance, as the quarter reported on Thursday. [2]

Those results did not really surprise markets, but were definitely not good and played into fears around the growth prospects of the tech giant. They also came against a backdrop of an around 50% rally of AAPL.us, during the first seven months of the year that had sent it to new record highs.

These had created concerns around the stock's valuation and the results apparently aggravated them, since markets reacted negatively. AAPL.us shed nearly 5% on Friday, posting its worst week in nearly two years. It is now in risk of breaching 23.6% Fibonacci, which could accelerate the fall towards the critical 169.99-168.22 region. This is defined by the EMA200 and the 38.2 Fibonacci, although daily closes below are needed to negate the upside bias.

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However, the Relative Strength Index has moved to the most oversold conditions since the start of the year, while the aforementioned crucial area has the ability support the stock if further losses ensue. Declines that are contained by this region are viewed as short corrections that have the ability to lead to a rebound and eventually new record highs (current at 198.35).

The reported quarter is typically the slowest for Apple and there were definitely concerning signs, but there were also reasons for optimism. Revenue growth in the increasingly important services segment and strong iPhone sales in emerging markets were the main bright spots. However, the overall smartphone market is shrinking and the tech giant has not innovated in a long time, making matters worse. This in my view is one of the main long-term headwinds, but Apple recently threw is hat in the augmented reality (AR) arena. Remains to be seen if and how fast that can prove a growth story.

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 07 Aug 2023 https://www.apple.com/newsroom/2023/08/apple-reports-third-quarter-results/

2

Retrieved 17 May 2024 https://www.apple.com/investor/earnings-call/

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