Apple Stock Dropped 5% After Q4 Earnings. Why You Should Not Worry.

TL;DR

Apple's stock dropped 5% after Q4 earnings due to declining iPhone sales, particularly in Greater China, but there are reasons to remain optimistic about the company's long-term growth prospects.

Transcript

Hello everyone, this is Victor  here. Welcome to the Intelligent   Investor Channel where you will learn about  “stock investing and personal finance”   that will help you become a great investor. In today’s video, I am going to explain   “Why Apple’s stock dropped 5% after Q4 earnings.  And Why You Shouldn’t be Worried about it.”  I am going to co... Read More

Key Insights

• 💦 Apple's stock drop was mainly driven by a decline in iPhone sales and weaker performance in Greater China.
• 👶 The delay in the release of the iPhone 12 impacted Q4 sales, but there is optimism for Q1 2021 with the new model.
• 💪 Apple's other product categories had strong performance, indicating diversification and growth opportunities beyond iPhones.
• ✋ Wearables and Services have the potential to drive Apple's long-term revenue growth, with high gross margin and double-digit growth.
• 😎 The next revolutionary product for Apple is anticipated to be the Apple AR glasses, which may further drive long-term growth.
• ⌛ Timing the investment in Apple stock is recommended during price corrections or when the stock is undervalued to reduce risks.
• 👤 Apple's ecosystem and its iOS user base provide a competitive advantage and potential for selling more services to active device users.

Questions & Answers

Q: Why did Apple's stock drop 5% after the Q4 earnings?

The drop was primarily due to a decline in iPhone sales by 20.7% YoY and weaker sales in Greater China by 28.6% YoY.

Q: What were the reasons behind the decline in iPhone sales?

The delay in the release of the iPhone 12 to October and customer anticipation for the new model likely led to delayed purchases and a temporary decline in Q4 sales.

Q: How did Apple's other products perform in Q4 2020?

All other product categories, including Mac, iPad, Wearables, and Services, had double-digit growth, leading to record revenue despite the decline in iPhone sales.

Q: What are Apple's long-term growth prospects?

Apple's long-term revenue growth is expected to come from products like Wearables (Apple Watch, AirPods) and Services (App Store, Apple Cloud) with their high revenue growth potential.

Summary & Key Takeaways

• Apple's Q4 2020 earnings saw a decline in iPhone sales by 20.7% YoY, leading to a 5% drop in the stock. However, all other product categories had double-digit growth.

• Greater China sales were down 28.6% YoY, which also contributed to the stock drop.

• Despite the decline, Apple had record revenue of $64.70 billion in Q4 2020, and there is optimism for the upcoming Q1 2021 quarter with the release of the iPhone 12.