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The Wisom of the Stock Market
How does Wall Street react when Apple performs well?
Consider this, comparing this quarter in 2004 to this quarter in 2005:
Profit per share jumps from six cents to thirty-four cents.
Profit jumps from $46 million to $290 million.
Revenue jumps 70%--from $1.91 billion to $3.24 billion.
The company ships 43% more computers (1,070,000) and over 558% more iPods (over five million shipped).
There are significant new products (both hardware and software) ready for third quarter release.
Third quarter guidance is extremely good, and Apple has a recent history of understating when estimating future performance.
The performance--based on revenue, profit, and profit per share--was better than analysts expected, and guidance for third quarter was in line with analyst expectations. So, how does Wall street treat such good news?
By seeing the stock dump nearly 4% in after hours trading.
Of course, the stock tripled last year, split, and has risen 30% so far this year. The after hours trading in a situation like this always sees some people sell to reap the rewards of their profit. Still, it's one of the oddities of the market that strong company performance is sometimes greeted with a noticeable loss in stock value (if only for a few days).
Now, don't you wish you had put a few thousand dollars into Apple at the beginning of 2004? I know I do…