Tuesday Will Tell the Tale of Apple Stock and Hardware Success

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We’ve had a progressive amount of hand wringing and reading of supply chain tea leaves, all leading up to Apple’s 2nd Quarter Earnings Report, which hits tomorrow. Most of the news has been negative, especially anything regarding the iPhone X and HomePod. However, it seems that there are now some who expect Apple’s stock to weather the storm and rebound based on better than expected sales and numbers elsewhere. If they are correct, Apple could make back the over 9% its stock has lost over the past month very quickly. If not, it will be interesting to see if it slides more or just stabilizes.

iPhone X Numbers?

If nothing else, tomorrow’s results will give us a good idea of how accurate supply chain tracking is as an indicator of iPhone sales. Results of these methods have been mixed in the past, but with numbers looking as bad as they have the last two weeks, it would be surprising if there is nothing to them. It is highly unlikely that Apple will give us direct sales numbers of any particular model, but the average price per device should tell us a lot about which model is leading the way.

Services

How fast is Apple’s Services business growing? It has been rapid over the last year, but this quarter could be a real watershed. But will it be enough to offset weakness in iPhone sales? I’m not sure if we are there yet, but with the strength of Apple Music and Apple’s investments in Apple News, it won’t be long before Services is as big or bigger than Apple’s hardware business.

iPad and the Mac

Both of Apple’s “other” major hardware categories have been performing well over the last year. Did this continue into the early part of this year? Were iPad and Apple Pencil sales strong at the release of the new sixth-gen device? Continued solid numbers won’t offset disappointing iPhone sales, but would be reason for optimism about Apple’s growing product diversity.

The Apple Watch and AirPods

Apple Watch sales have been growing faster than the rest of their hardware. Did this continue after Christmas? I expect we will see at least modest growth here, with the average price per device to be high thanks to strong Apple Watch Series 3 with Cellular sales.

HomePod

Will Tim Cook talk about the HomePod? He will likely have to during his Q and A with analysts, but I wouldn’t expect to hear much more than what has to be said apart from that. If sales are poor, we definitely won’t get any kind of breakout. However, we should get enough data that, when combined with supply chain information, gives analysts an idea of how well it is actually selling.

Tomorrow is a huge day for Apple. Hopefully getting some hard numbers will, if nothing else, settle the market craziness down. The uncertainty of the current situation has contributed as much to the volatility in Apple’s stock price as negativity. Legitimate reasons for a negative opinion may be revealed tomorrow, but I think that the certainty that hard numbers and information will bring should settle things down. Even if the numbers aren’t great, hopefully this certainty will get Apple’s stock moving in the right direction again.


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