Apple shares fall prior earnings report

Apple, Day

Apple’s 4th quarter earnings report is expected to be announced after the US market close today. According to Zacks research, based on the forecasts of 11 analysts, Apple’s earnings per share for Q4 2019 is expected at $4.53, with the EPS for the same quarter the previous  year was $4.18. The company earnings has beat consensus for the past 4 consecutive quarters. Meanwhile, Revenue is expected to reach $88.4 billion, up from $84.3 billion last year.

During 2019 APPL shares price grew by more than 95.84%, while last Friday it posted a new all-time high around $323.

At the end of the year (31 December), there were few significant changes from the company’s investors. Some of the institutional investors and hedge funds also modified their holdings of the company. BOSTON TRUST WALDEN, INC owned 977K shares, however during the 4th quarter sold around 43k, which reflected  a deduction of up to 4.3% of its holdings in Apple Inc. ARTEMIS INVESTMENT MANAGEMENT LLP purchased about 800.2K shares of Apple Inc. during the same period, while another institutional investor, WEDGE CAPITAL MANAGEMENT LLP purchased 162.6K shares of the company’s stock. Hence institutional investors and hedge funds now own 62.50% of Apple Inc.’s shares.

Now if we flip to the company insights, in the last month of the 4th quarter, the company’s iPhone sales in China rose more than 18% y/y; this supported the stock, which closed the year on December 31 at around $ 291.84. This week we saw a record high at $323.05 before the price fell on the market open just today.

Although Atlantic Equities had downgraded Apple shares on January 14,  interest turns to Apple products and most precisely Apple TV+, which, according to the WSJ, has more than 33.6 million subscribers in the United States (excluding users worldwide) with 1 year free viewing conditions for customers who purchased an iPhone, iPod, iPad, Mac, or Apple TV after November 10.  In addition, according to 9to5Mac, in 2020 Apple Inc. plans to launch the Apple Watch Series 5 in (PRODUCT)RED. Apple donates a portion of the proceeds from every (PRODUCT)RED product that it sells to The Global Fund to Fight AIDS, Tuberculosis and Malaria, raising more than $220 million since 2006. Also it has been revealed that AirTags, a personal tracker to help in finding things by just lifting the iPhone to point to the location of that item, will be ready to go on the market soon.

Despite the fact that iPhone sales grew at the end of last year, as China is currently being threatened with an outbreak of a new type of coronavirus in Wuhan, this weighs on the Chinese economy but also on stock markets.

From a technical perspective, the APPL share price has stood above the 200-day EMA line since the beginning of June. This comes in line with the MACD indicator that has sloped in the positive area since then, while it is continuously making new highs, suggesting that the asset’s uptrend is strengthening.

However, the decline on prices seen this week turns attention to the immediate Support and Resistance barriers. If earnings for the 4th Quarter beat expectations, this could help the asset to retest $323 highs. If the report shows a miss, the price could fall to the lower Bollinger Band line, at $287, which coincides with the 50-day EMA. The latter could be considered a strong Support level, since it has been supporting the asset strongly since June 2019.

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Chayut Vachirathanakit
Market Analyst – HF Educational Office – Thailand

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