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Why Apple Stock Surged Over 5% after Its Q2 Earnings Release

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May. 1 2019, Published 11:25 a.m. ET

Apple’s second-quarter earnings

On April 30, US tech giant Apple (AAPL) released its fiscal 2019 second-quarter earnings results after the closing bell. In the quarter, the company reported adjusted EPS of $2.46, down 9.5% from its EPS of $2.75 in the second quarter of fiscal 2018. Nonetheless, it beat Wall Street analysts’ estimate of $2.36, according to Thomson Reuters data.

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Investors’ positive reactions

On April 30, Apple largely traded on a negative note before its earnings announcement. The stock settled at $200.67 with a fall of ~1.9% compared to the S&P 500 Index’s 0.1% rise and the NASDAQ Composite Index’s (QQQ) 0.8% fall in the session.

However, after the company’s earnings release, its stock surged ~5.1% to $210.82 in after-hours trading.

Due to the recent weakness in the iPhone sales trend, analysts weren’t expecting the company to report major year-over-year gains in its second quarter. Analysts’ low expectations for AAPL’s earnings had already been factored into its stock price. As a result, Apple’s slightly better-than-expected earnings and revenue helped it gain investors’ confidence despite a sharper-than-sequential drop in the revenue of the iPhone.

As of April 30, Apple stock has risen 5.6% month-to-date and 27.2% YTD (year-to-date) compared to the 17.5% and 22.0% gains in the S&P 500 Index and the NASDAQ Composite Index, respectively. In comparison, tech companies Alphabet (GOOG), Microsoft (MSFT), Qualcomm (QCOM), and Advanced Micro Devices (AMD) have risen 14.7%, 28.6%, 51.3%, and 49.7%, respectively, YTD.

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