Apple has been laying low when it comes to the media lately, but that doesn’t mean that it is not providing strong opportunities for traders right now. Anyone who pays attention to Apple knows that the iPhone is the biggest product for the company right now. This mobile device accounted for more than 69 percent of its first quarter sales this fiscal year, and it is going to continue to be the biggest product for the company for the foreseeable future.
Apple recently had three consecutive quarters of declining sales, the first time in decades that the company posted declining sales. When the iPhone 7 was released, this trend halted, and Apple once again saw itself on solid ground. There was a 5 percent bump upward in unit sales when the new model was released, and this meant a world of difference for Apple, helping it to find favor in the investing public.
But now that the iPhone 7 has been out for several months, there is once again uncertainty about what Apple’s numbers will be. This has caused some investors to back away from the company, and this is where your opportunity is, regardless of whether you’re a long term investor, a day trader, a binary options trader, or something else. Apple is ripe with opportunity, and the best way for you to know what to do concerning the stock is to take a look at just a few simple numbers.
The most important number for Apple’s next earnings release is going to be the number of units sold of the higher end iPhone 7 Plus. Let’s take a look at how the numbers break down.
The iPhone 7 SE—the cheapest version of the new phone—is listed at $399 each. The iPhone 7 Plus comes in at $769. That’s almost $400 difference between the two models. Now, look at the average price of all iPhones sold in the second quarter last year: $595. That number is pretty low, but it accounts for the popularity of the lower end models. Once the iPhone 7 Plus was released, the average price per phone jumped up to $695—with the SE model still in the mix. This shows just how popular the new Plus model is, and experts believe that this is where Apple is going to make it or break it. If numbers for the Plus continue to stay high, then even if the number of unit sales declines slightly as is expected, then profit numbers will still go up. If Plus units decline, then profits will decline as well, which will cause Apple’s stock to drop significantly. As you can see, the Plus model sales numbers hold a lot of weight, and regardless of what happens with other Apple products, it is currently the key to their success.
Looking at estimates leading up to the next earnings date will be your key, but only in terms of what is actually reported. For example, at Apple’s last earnings release on January 31st, the consensus estimate is that the company would report earnings of $3.22 per share. They surprised analysts by actually realizing $3.36 per share in earnings. For a company that has spent the last year just barely beating estimates or even disappointing, this is a large gap. It’s one of the main reasons why Apple’s price has surged in the aftermath of the report. At the time of writing, three market days had passed since this news was released, and Apple’s stock has risen by about $8 per share. That’s more than 5 percent. If they continue to surprise, more long term growth is likely.