Apple Earnings Preview: Can AAPL Beat the Low Expectations?
By:Mike Butler
Apple (AAPL) reports quarterly earnings on May 4th after the market closes, and both revenue and earnings per share (EPS) expectations are lower than the previous quarter. This brings an interesting narrative to the table, as the tech giant could either blow the low expectations out of the water or come in as expected – how the market perceives this information will be interesting to witness.
Apple’s EPS is expected to come in at $1.43, on an estimated $92.84 billion in revenue.
AAPL has surged almost 40% from the start of the year, with very few blips on the radar while almost doubling the performance of the NASDAQ ($QQQ) in the same period – the stock has climbed from $130.28 to $170.35 on May 2nd - will the stock continue to climb higher or falter with lower earnings expectations from the previous quarter?
Based on the implied volatility of the weekly options cycle, we can see what the market expects from AAPL through Friday – the expected move for the rest of the week is +-$5.60:
With such a low expected move relative to the closing stock price of $168.54 on May 2nd, we can deduce that the market isn’t really expecting a big move from this announcement – this is unlike some of the other tech stocks that have already reported.
This earnings announcement does account for about 50% of the expected range through June 16th, which is a large chunk given the circumstances.
The options market expects AAPL to have a range of +-$27.21 through mid-December.
Join Mike on Options Trading Concept Live every trading day from 11a-12p CST for a look at earnings trades, options strategy & concept discussions and more!
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.