What’s Driving AAPL’s Underperformance?, iPhone Demand in China, Apple Jitters
Today's Above Avalon Daily email contains the following stories:
What’s Driving AAPL’s Underperformance?
iPhone Demand in China
Apple Jitters
I have been receiving questions regarding what may be going on with AAPL and reports suggesting there are iPhone demand issues in China. Let’s discuss both items.
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About Those iPhone Sales Reports From China, Apple Designers Talk iPad Pro and Apple Pencil Pro
Hello everyone. Happy Wednesday.
We will jump into today's update with some iPhone news, followed by iPad Pro and Apple Pencil Pro.
About Those iPhone Sales Reports From China
Here’s Bloomberg:
“Apple Inc.’s iPhone staged a rebound in China last month with shipments rising 52% amid a flurry of discounts from retail partners.
The latest figures from the China Academy of Information and Communications Technology [CAICT] showed smartphone shipments surging in the country, of which roughly 3.5 million units came from foreign brands, according to a Bloomberg calculation. The iPhone accounts for the vast majority of such devices, and its bounceback comes after it registered growth in March following steep declines in the first two months of the year."
What a whirlwind. There’s been a lot of noise written about iPhone sales in China. It’s comical how in just a few weeks the narrative has apparently shifted from “Apple is falling out of favor in China” to Apple is benefiting from a “premiumization trend in China.” The reality is that those making such claims aren’t sure what is going on and are instead trying to make sense of smartphone shipments data from CAICT.
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Key Takeaways From Apple’s 2Q24 Earnings
Hello everyone. Welcome to a special Friday edition of the Above Avalon Daily. We will begin analyzing Apple’s 2Q24 earnings. There is a lot to unpack. The earnings review will take place across a few updates.
Key Takeaways From Apple’s 2Q24 Earnings
Heading into 2Q24 earnings, the expectations bar facing Apple had been set low. The company easily jumped over the hurdle. Both revenue and EPS beat consensus with revenue trending flat when excluding a one-time COVID impact. Gross margins are trending at levels that the company has not seen in over a decade. Apple provided 3Q24 guidance that suggested revenue growth will return. Everything is on track for FY24 to be something of a rebound year for Apple on the financial front. Under the hood, the Apple ecosystem continues to quietly expand as new users enter the fold and existing users move deeper into the ecosystem.
The Numbers
Here are Apple’s reported 2Q24 results versus my expectations with brief commentary for each item.
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An audio version of the newsletter is available to members who have the podcast add-on attached to their membership. More information about the podcast add-on is found here. Special Inside Orchard bundle pricing is available for Above Avalon members. Additional membership customization is available via the Financial Models add-ons.