So Apple posted, by a lot of measures, the single best quarter any tech company has ever had, and its stock got taken out back and shot for it. I've been staring at the ticker on and off all afternoon like it's going to change its mind if I look at it enough times. It hasn't.
The numbers themselves are honestly a little absurd. $54.5 billion in revenue for the holiday quarter, $13.1 billion in profit, and 47.8 million iPhones sold in three months. Say that last number slowly. Forty-seven point eight million phones. That's more phones than most countries have people. And yet by the time the closing bell rang today the stock was down over 12%, which by dollar terms is something like $60 billion gone in a single trading day. Sixty billion dollars, poof, because the growth wasn't growth-y enough for whoever sets the mood on Wall Street this week.
I get the mechanics of it, I really do. Guidance for next quarter came in soft, gross margins are expected to shrink because the products (new iPad mini, the smaller-margin stuff) cost more to make relative to what they sell for, and the whisper numbers analysts had been passing around were higher than what Tim Cook actually said on the call. Stocks trade on expectations, not on whether the company is doing fine. I know all that. It still feels completely unhinged to watch a company report the most profitable quarter in the history of, like, capitalism, and get punished like it just announced layoffs.
My cousin texted me around 2pm asking if she should sell her AAPL because her coworker said Apple is "done." I told her that a company that just made thirteen billion dollars in ninety days is not done, and that her coworker probably doesn't own any Apple stock and is just repeating a headline he skimmed. She sold anyway. I don't know what to tell people sometimes.
Here's my actual opinion, since apparently everyone wants one today: this whole reaction says way more about how broken the growth-at-all-costs mindset is than it says about Apple. A company cannot grow 80% a year forever. Nobody can. iPhone sales were still up year over year! iPad sales were up huge! But because the growth rate slowed down a little from the previous insane pace, the story became "Apple is struggling," which is a genuinely weird sentence to type about a company sitting on something like $137 billion in cash. That's not a struggling company. That's a company whose stock price got ahead of reality sometime last fall and is now correcting, which is a completely different and much more boring story that doesn't get you traffic.
(Small tangent: I'm typing this on a phone with a screen crack running corner to corner, an iPhone 4 I refuse to replace because it still works fine and I resent being told to upgrade on a schedule that isn't mine. So take my Apple opinions with whatever grain of salt that implies. I am not exactly the target demo for quarterly growth panic.)
What I keep coming back to is how disconnected the stock reaction is from anything a normal person experiences using these products. Nobody buying an iPhone 5 this week cares what the gross margin percentage was. Nobody in line at the Apple Store is thinking about sequential growth versus year-over-year comparisons. That's a totally separate universe from the one where you're deciding whether to spend $199 on a new phone, and every January the two universes collide for one day and everybody acts surprised.
Anyway. My cousin's coworker is probably feeling very smart right now and will feel very dumb in six months, or maybe it'll be the opposite, I genuinely don't know and neither does anyone confidently tweeting about it tonight. I'm going to go charge this cracked old phone and stop refreshing the finance app before I start having opinions about things I have no business having opinions about.