AAPL Earnings After The Bell On Thursday

Apple stock is down 6.7% since January 18th because investors are worried about iPhone X sales. The worries stem from the report that the company cut its supplier orders. Initially, it was reported that Apple cut iPhone X orders by 20 million which was half the initial estimates. However, a supplier called Fujita said the cuts aren’t that large. We’ll find out the truth on Thursday when Apple reports. The billion dollar question is if the $1,000 price of the iPhone X caused customers to skip buying one despite the advanced OLED screen which has a high screen to body ratio, the better sound, the face recognition, and the animojis. We will see if the decision to heavily market animojis was a good idea. This isn’t a toy. It’s a $1,000 device. Some consumers might think that feature is superfluous. Orders for the iPhone 8 and 8 Plus weren’t cut. It would be a disaster for Apple stock if the iPhone 8 and 8 Plus sales don’t make up for the disappointing iPhone X sales.

The chart below shows the latest sell-side earnings estimates for Apple. As you can see, 14 analysts lowered their projections and 15 increased their estimates. While analysts likely won’t respond to the rumours about the order cuts, the stock clearly has. If the report is true, Apple stock will decline sharply on Friday. I’m not optimistic about this report because of the expensive iPhone X. Apple also had negative headlines during the past few weeks because the company slowed down the iPhone 6 and iPhone 6s devices after their batteries drained below a certain level. Apple was criticized for not being transparent about this as many fear the company is trying to mess with old devices to get people to upgrade more often. This caused Apple to offer cheaper $29 battery replacements. The fact that the company has sold out of batteries in recent weeks instead of iPhone X’s is concerning.