Apple shares have been on a tear following better than expected earnings and guidance, which was released in early May. Ahead of the earnings, Apple shares traded on the defensive as analysts had guided down their earnings. There were multiple reports ahead of the release of the financial results that pointed to a slowing of iPhone sales. Semi-conductor suppliers in the Apple iPhone supply chain had stated that orders were slower than expected. This generated headwinds for Apple’s share price, which were lifted following their earnings release. Since May 1st, the company’s share price has been on a tear climbing 12%.
Apples Earnings and Guidance
The company reported an earnings increase in Q1 of $2.73 per share- up from $2.10 a share last year and beating estimates of $2.67. In addition to beating on the bottom line, the company also reported revenue which came in better than expected having grown 15.5% to $61.1 billion. Just as expected, iPhone shipments were subdued, coming in at 52.2 million versus expectations of 52.54 million. But the result was still up year-over-year. What was not incorporated into expectations was that the iPhone sales per value where higher than expected because the price of the iPhone X was more expensive than the iPhone 7, which was released in the prior year.
Guidance was also stronger than expected. The company now estimates that revenue will come in at $51.5-$53.5 billion in the thirdfiscal quarter. Compare this to revenue forecasted by the street at $51.61 billion. Another shot in the arm for the company was the increase in the value of service revenue which climbed above 9.2 billion. That was more than expected. The company is now experiencing tailwinds and is likely to be the first company to be valued at more than 1-trillion. If you trade Apple shares, you can ride it out. If it reaches $203.45, it will value the company at 1-trillion.
Facebook Shares are Rebounding
Facebook posted better than expected financial results and also faced headwinds in the wake of the revelation that it assisted in the process of Russian interference in the 2016 US election. The stock price has rebounded 23% since hitting near $150 per share ahead of earnings.
Facebook reported ESP of $1.69 per share versus estimates that it would report EPS of $1.35 per share. The company reported revenue of $11.97 billion versus the expected $11.4 billion. Facebook reported adjusted EPS of $1.04 on revenue of $8.03 billion last year during the same quarter. Surprisingly the number of daily active users was in line with expectations at 1.45 billion. Monthly active users were also in line with expectations at 2.2 billion.
The issue going forward for Facebook shares is that the company will now focus much more on safety and security as opposed to marketing. It has become clear that Facebooks users are their product, as they market the ability to directly advertise to customers. This provides them with a clear advantage over their competitors.
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