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Apple share price down despite reporting beats across the board

A murky outlook likely explains why the Apple share price dipped after revealing beats across the board in the third quarter.

It was a blowout quarter for Apple – with the $2.45 trillion tech giant reporting solid beats across the board.

Despite that, rumblings of a chip shortage and no guidance look to have left investors with little to latch onto.

The stock fell 1.49% during Tuesday’s session and continued to dip in after-hours trade, shedding another 2.07% to trade at the $143 per share mark. Year-to-date the Apple share price has rallied some 13%.

Unpacking the third quarter results

On the top-line, Apple delivered another spectacular quarter of growth, reporting total revenues of $81.4 billion, implying a year-on-year increase of 36%. That was well ahead of consensus, with analysts expecting 'just' $73.3 billion in revenues for the third quarter.

That performance was driven by strong growth across both Apple's products and services segments. Q3 products revenue hit $63.9 billion, while quarterly services revenue came in at $17.4 billion.

This translated to an impressive profit performance, with net income leaping from $11.2 billion (Q3 FY20) to $21.7 billion (Q3 FY21). Earnings per share were $1.31 (basic) and $1.31 (diluted). That was close to a 30% beat on analysts expectations, who estimated Apple would report EPS of $1.01, on average.

Commenting on those results, Apple CEO, Tim Cook, said:

‘This quarter, our teams built on a period of unmatched innovation by sharing powerful new products with our users, at a time when using technology to connect people everywhere has never been more important.’

Quarterly operating cash flow was $21 billion while Apple said it ploughed $5.7 billion into research and development in the period. Elsewhere, the tech giant revealed it would pay a 22 cent per share dividend on 12 August.

Other points to consider

It will be telling to see how the sell-side reacts to the quarterly in the coming days. Apple has historically been well liked by analysts, with the stock currently commanding a Buy rating.

Despite those roaring results and an upbeat analyst outlook, when questioned about the possible impact of a global chip shortage, Tim Cook, on Apple’s earnings call said:

‘The majority of constraints we're seeing are of the variety that I think others are seeing, that I would classify as industry shortage. We do have some shortages in addition to that, where the demand has been so great and so beyond our own expectation that it's difficult to get the entire set of parts within the lead times that we try to get those.’

Such comments, as well as broader regulatory issues currently besieging Chinese equities, likely weighed on the stock on Tuesday.

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