The “But” Of Apple’s Beat

Apple is the latest tech giant to report results. But despite beating on most metrics, the stock is falling after hours. Let’s take a look at why. 👇

First, let’s start with this CNBC chart that summarizes actuals vs. estimates for the main metrics:

As we can see, the company topped earnings and revenue estimates, driven by strength in its iPhone and services businesses. Gross margin also expanded in the quarter, more than 70 bps above Wall Street’s outlook. However, the company’s Mac and Wearables divisions missed as discretionary spending on these items remains soft among consumers. đŸ”ē

Within services, Tim Cook said that “every main service hit a record,” which is great to hear about its higher-margin business. It’s also sitting on a $162.1 billion cash pile, will pay a $0.24 per share dividend this month, and returned $25 billion to shareholders during the quarter by repurchasing shares and paying dividends. 💰

But things weren’t all great for the business. For example, the Greater China area (its third largest market) is seeing increased competition and revenues essentially flat YoY at $15.08 billion. Additionally, its Mac and iPad businesses remain under pressure vs. strong 2022 comparables. Analysts are unsure if the release of M3 chips and a product refresh will be enough to grow again. ⚠ī¸

Looking ahead, the company did not provide formal guidance but expects total revenues to be flat YoY during its holiday quarter. Analysts had expected 4.5% YoY growth, though its gross profit margin and EBIT forecasts exceeded analyst expectations. Nonetheless, with the company experiencing its fourth straight quarter of YoY revenue declines, investors remain concerned about its ability to grow at its size and in the current economic environment. đŸ˜Ŧ

$AAPL shares initially popped but are now down about 3% after the bell as investors digest the news.

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Nvidia Delivers Bears Another Blow

With it being Nvidia day and all, let’s recap the semiconductor giant’s earnings and reaction. 👇

Before the print, we noted that Nvidia had only seen a downside surprise in earnings vs. expectations three times in the last ten years. However, with analyst estimates high and bullish sentiment roaring into the print, bears thought the contrarian view might have paid off.

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Renewable Stocks Lack A Charge

The current market environment has not been kind to renewable energy stocks like electric vehicle makers or solar manufacturers. And that trend continued today with lackluster earnings results. 👎

Rivian kicked it off by saying that it’s laying off 10% of its workforce due to EV pricing pressures. Although it built and shipped more than double the vehicles it did in 2022, its 2023 losses still totaled more than $5.40 billion. đŸĒĢ

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Dave Rides The Speculation Wave

Neobanks that came public during the pandemic at insane valuations and got crushed over the last few years are roaring back in the current environment. đŸĻ

Dave Inc. is a digital banking service primarily focusing on cash advances, working off tips and subscription fees rather than overdraft fees. That was a solid business in the ZIRP era of cheap money but faced a reckoning in a higher interest rate environment. 💸

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Buyers Move Beyond Tech

Animal spirits have been a big theme of this newsletter since October, and boy, are things getting wild. While the mainstream media continues focusing on tech giants like Nvidia, investors and traders are searching far and wide for new opportunities to squeeze the shorts and make a killing. đŸ•ĩī¸â€â™‚ī¸

Today’s surefire sign of this speculative fervor building in the market is everyone’s favorite non-meat meat stock, Beyond Meat. đŸĢ¨

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