After topping $180 a share ahead of its earnings report, Apple (NASDAQ: AAPL) stock dropped for the week ended February 2. In its latest quarter, Apple cannibalized its own iPhone 7 and 8 sales by releasing iPhone X concurrently. Yet the news was not bad: average device prices rose an impressive $100. Apple sold fewer units but made more: markets should reward the company for that accomplishment.
iPhone X is not a technical marvel. It implements 3D facial scanning for securely unlocking the device. This replaces fingerprint recognition. Consumers must think about it, though: for $1,000 U.S., they are only getting that feature and nothing else worth mentioning. Conversely, an iPhone 8 is good enough for most, but then this model is hardly a big step ahead of the iPhone 7.
Fundamentals continue to impress investors in the most recent quarter. The active install base topped 1.3 billion, a new high. 240 million users signed up for paid subscriptions, up 30 million Q/Q. Apple Watch sales rose by 50%. Instead of rewarding AAPL stock, markets fretted over Apple’s weak guidance. It hinted that revenue growth will slow, hurt by lower iPhone shipments. Still, the more expensive iPhone sales will grow by up to 17%, adding a solid $7 billion - $9 billion this year.
Takeaway
Apple did deliver and continues to perform. Buying on the weakness would make the most sense.
