Apple has just reported better than expected quarterly results sending the stock up by 4% during after-hours trading. The stock is now trading at $198 and likely to reach the psychological level of $200 when normal hour trading resumes. The news will strengthen the company even more in the race to become the first company to reach one trillion dollars in market capitalisation.
The company reported earnings per share of $2.34 on revenue of $53.3billion whilst analysts surveyed by FactSet had been projecting $2.16 in EPS and $52.3 billion in revenue.
Although this is all positive for the company, we need to understand that Apple’s revenue beat came from higher iPhone price, rather than higher number of iPhone sales. The average selling price for an iPhone was reported as $724, which was far ahead of $693 projected by analysts.
Apple managed to sell 41.3 million iPhones during the quarter (ending July 31st) which is down 21% from the previous quarter but still up 1% from a year ago.
There was also an announcement from the International Data Corp that Apple fell to third place in the global smartphone makers list for the first time in eight years after Huawei and Samsung.
Even though there was a decline in the global sales of iPhones, investors were relieved to hear that other Apple products, like Apple Watch and Airpods, have been increasing in popularity.
Positive earnings news on Apple provided a good breather for the tech sector after disappointments results from Facebook, which slumped more than 20% last week, and Twitter. The tech heavy Nasdaq Composite index, which was trading at a record level of over $7,900 last week suffered a drop of 4% and hence offers a good opportunity for trading.
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