If investors were hoping Apple, Inc. would inject this earnings season with a little jolt, they were sorely disappointed when the company missed estimates in a rare bad show. Now it’s looking like nothing can help this earnings season.
Even though the news from earnings season looks good at first glance, it’s covering up some bad news. So far a quarter of companies have reported and roughly two-thirds have beat expectations. However, S&P 500 companies are still on track for profits to decline by 1% over last year, according to The Wall Street Journal.
The reason why so many companies are meeting or surpassing estimates and, yet, are still on target for a profit decline, is because estimates are lower than usual. The market has been living off the relief resulting when companies are meeting those estimates, according to CNBC.
Basically, the sentiment in the market is that things aren’t looking impressive, but they aren’t bad as initially feared, according to SeekingAlpha. However, the disappointing growth in revenue should be concerning for investors.
And now even Apple has missed its estimates, causing the stock to plunge by 4.32%, or $25.95, throughout the day to close at $574.97. Typically, Apple is relied upon to blow out expectations. Even though Apple’s reported revenue of $35 billion, up 23% year-over-year, analysts expected revenue of $37.2 billion.
Apple stock at the end of the day on July 25, 2012.
Apple’s reason for the unexpected miss was that the company sold less iPhones, perhaps because consumers are waiting for the newest version that is rumored to come out in the fall.