Apple Earnings Preview—4.4% Stock Price Move Expected

Earnings season for some other Magnificent Seven stocks has been a disaster

• Apple will report earnings on Aug. 1 after the stock market closes.

• The tech-giant has met or exceeded earnings-per-share (EPS) and revenue forecasts four quarters in a row.

• Apple is expected to report an EPS of $1.33 on $84.14 billion in revenue.

• Unlike some other Magnificent Seven stocks, both EPS and revenue estimates for Apple are down from last quarter.

• More information on the foldable iPhone will likely be a focal point for the earnings call.

Magnificent Seven Carnage

The start of the earnings season for the Magnificent Seven stocks has been nothing short of a disaster, with Alphabet (GOOGL) and Tesla (TSLA) both suffering stock price selloffs. It’s happened even after Google delivered a strong performance and Tesla had mixed performance. Both stocks fell sharply, and that selling has not stopped through the week. The Nasdaq ETF (QQQ) is down almost 5% this week and almost 9% from the recent high of $503.52 realized on July 10. Next week, Apple (AAPL), Amazon (AMZN), Meta (META) and Microsoft (MSFT) will all release quarterly earnings. Will the carnage continue?

Apple earnings preview

Apple is set to report earnings Aug. 1 after the stock market closes. The tech giant is expected to announce earnings per share (EPS) of $1.33 on $84.14 billion in revenue—both figures are down from last quarter.

AAPL stock has been one of the strongest recent performers relative to the other Magnificent Seven stocks, after holding its Worldwide Developers Conference. The stock has rallied from a recent low of $164.07 all the way to $237.23 in less than three months. The stock currently sits at $215:

Luca Maestri, Apple’s chief financial officer, offered insight into the share buyback program during the last earnings call: “Given our confidence in Apple’s future and the value we see in our stock, our Board has authorized an additional $110 billion for share repurchases. We are also raising our quarterly dividend for the 12th year in a row."

The cash dividend was $0.25 per share of common stock, an increase of 4%.

Apple is doing whatever it takes to combat increased competition, both global and international. The stock market has liked what the company has had to say recently, given the big move to the upside.

At the beginning of the year, AAPL stock was the forgotten darling as the rest of the AI sector took off. It will be interesting to see what management has to say during this earnings announcement, but we should expect clarity on AI initiatives and more information on the new foldable iPhone.

With earnings announcements, we can always look to the options market for context around the expected stock price move based on current implied volatility. For next week, the options market is pricing in an expected stock price move of +/- $9.28 which contains the earnings announcement. This is just under 5% of the stock price, which is a low expected earnings move for a high-flying tech stock like Apple.

Looking to the end of the year, we see the January 2025 options cycle is pricing in a +/- $28.60 expected stock price move. With this earnings announcement making up only around 30% of the expected move through the rest of the year, the market isn't placing too much weight on it. With that said, we've seen big earnings surprises before and we will again, so a big stock price move is possible even when it's not expected.

Bullish on Apple Stock for earnings

Active investors bullish on Apple stock will want to see a big earnings beat this quarter. Both EPS and revenue estimates are down, so a big beat could work wonders for the tech giant. In addition, bulls will want to hear positive remarks in relation to artificial intelligence and a strong growth forecast for the rest of the year.

Bearish on Apple Stock for earnings

While Apple has seen a strong run-up in the stock price over the past few months, the Magnificent Seven earnings results so far have not been great. Apple bears are likely looking for an earnings miss on already reduced EPS and revenue figures. If that happens, or if the forecast for the rest of the year is mediocre, we could see the Mag Seven selloff continue through next week.

Tune in to Options Trading Concepts Live every market day for in-depth earnings strategy sessions for all of the Magnificent Seven tech stocks on deck to report!

Mike Butler, tastylive director of market intelligence, has been in the markets and trading for a decade. He appears on Options Trading Concepts Live, airing Monday-Friday. @tradermikeyb

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