Apple's Stock Falls 4.8% on 3Q Outlook... Market Cap Drops Below 3 Trillion Won

by Yoo Jaehoon

Published 05 Aug.2023 08:49(KST)

Apple's stock price plunged nearly 5% on the 4th (local time) due to a gloomy third-quarter earnings outlook.

On that day, Apple shares closed at $181.99, down 4.8% from the previous day, in the New York stock market. This is the lowest level since June 9 ($180.96) and the largest drop in more than 10 months since September 29 last year. The market capitalization, which was the world's first to exceed $3 trillion (based on closing price), also fell below $3 trillion again.

Apple's Stock Falls 4.8% on 3Q Outlook... Market Cap Drops Below 3 Trillion Won

The sharp decline on that day appears to be due to the disappointing earnings forecast announced the day before. Apple recorded $81.8 billion in revenue and $1.26 earnings per share in the second quarter (fiscal third quarter). Revenue slightly exceeded Wall Street's estimate ($81.69 billion), and earnings per share were 5% higher than the estimated $1.19. However, revenue decreased by 1.4% compared to the second quarter of last year, marking the third consecutive quarter of year-over-year revenue decline.

In particular, third-quarter earnings are expected to fall short of market expectations. Luca Maestri, Chief Financial Officer (CFO), said that third-quarter revenue is expected to decline at a similar rate to the 1.4% decrease in the second quarter. Apple recorded $90.15 billion in revenue last year, but third-quarter revenue is expected to fall short of $90 billion. This not only indicates four consecutive quarters of revenue decline but also falls below Wall Street's forecast, which expected revenue at the level of last year's third quarter, disappointing the market.