Analysing Apple's Q3 2023 Performance: Moving Towards a $200 Stock Price
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Apple Inc. stock surpassed the 198 USD mark during the trading session on 19 July 2023. However, since then, the stock price has fluctuated in the range of 172 and 190 USD. Today, we will delve into Apple Inc.’s Q3 2023 financial performance, talk about the launch of its new products, analyse the current news landscape, and assess the potential for the technology giant’s shares to reach 200 USD by the end of 2023.
Apple Inc. released the Q3 fiscal 2023 report on 3 August 2023. Revenue for April to June decreased by 1% from the corresponding period of last year, totalling 81.80 billion USD. It is important to note that this marks the third consecutive quarter of declining revenue.
Luca Maestri, CFO of Apple Inc., expects that the company’s financial performance in this quarter is likely to be similar to Q2, marking the most extended period of revenue decline in the last two decades.
In Q3 fiscal 2023, iPhone sales dropped by 2%, down to 39.67 billion USD, Mac sales fell by 7% to 6.84 billion USD, and iPad sales saw a decline of 20% to 5.79 billion USD. On a positive note, sales of wearables, accessories, and home devices increased by 2% to 8.28 billion USD, and services revenue reached a record 21.21 billion USD, adding 8.2%. Net profit recorded a 2.3% increase to 19.88 billion USD, and EPS rose by 5% to 1.26 USD.
In early August 2023, Tim Cook, CEO of Apple Inc., noted that the company had over 1 billion paid subscriptions to Apple Music, iCloud, Apple News, and Apple TV+. Over the past year, the number of paid subscriptions rose by 150 million. The corporation’s deal with Major League Soccer (MLS) to broadcast its games on Apple TV+ has exceeded expectations in terms of the number of subscribers, according to Cook.
Luca Maestri is confident that many Apple Inc. customers are still using free services and believes the company can attract them to paid subscriptions by offering superior content.
As noted by Axios Media Trends, Apple Inc. successfully implements a strategy where the slowdown in product sales is offset by a surge in revenue from services. Worth noting is that services revenue accounted for 25% of the total quarterly revenue in Q3 fiscal 2023, a significant increase from the 10% recorded in 2015.
Mentioning the substantial growth in the number of active devices is important: on 2 February 2023, this figure was reported to exceed 2 billion, a significant increase from the 1 billion reported in 2016.
China is the third-largest market for Apple Inc., along with Hong Kong and Taiwan. In Q3 fiscal 2023, this region accounted for nearly 19% of the company’s total quarterly revenue. It is also important to remember that most of Apple’s products are manufactured in China.
On 7 September 2023, CNBC reported that employees of central government agencies in China received directives not to bring iPhones to their workplaces and to refrain from using them for work purposes. While the Chinese government did not publicly announce these measures, CNBC analysts speculate that Apple’s products could become entangled in trade disputes between Washington and Beijing. On the same day, the company’s stock responded to the news with a 2.92% drop to 177.56 USD per share.
UBS analysts also emphasise the increased risks posed by Chinese authorities to Apple Inc. They believe that a decline in the tech giant’s stock prices could trigger a broader downturn in the entire US stock market.
On 12 September, Apple Inc. held its annual autumn presentation, unveiling the new Apple Watch Series 9 and iPhone 15. However, the event failed to ignite investor enthusiasm, as on that day, Apple Inc. stock prices closed the trading session at 176.30 USD, a decline of 1.71%.
On 13 September, as reported by Reuters, France suspended the sale of iPhone 12 due to the detection of electromagnetic radiation levels exceeding permissible limits. A day earlier, the National Frequency Agency of France (Agence nationale des fréquences, ANFR) announced research findings showing that the iPhone 12 exceeded the EU’s allowable limit of 4 W/kg, with a reading of 5.7 W/kg.
Apple Inc. representatives asserted that this smartphone model complies with all radiation emission standards and holds certifications from international organisations. At the same time, the company pledged to release a software update aimed at resolving the issue of iPhone 12 radiation levels. Belgium's state secretary for digitalisation requested that the corporation prepare this update for all EU countries.
On 13 September, following this news, the company’s stock experienced a 1.19% loss, plunging to 174.21 USD per share.
Exponential Moving Averages with periods of 75 and 265 converged on 24 March 2023 in favour of an uptrend. At the time of writing on 19 September 2023, stock prices are testing the area between these lines. From a technical analysis perspective, these levels present a potential rebound area for stock prices, signalling the continuation of the bullish trend. The nearest growth target falls within the range of 195 to 200 USD.
Another potential signal for a rise in quotes will be a rebound from the lower boundary of the long-term ascending channel located around 165 USD. It should not be excluded that the quotes could fall to this level before resuming their upward trajectory.
The second signal supporting potential stock growth in 2023 could be a test of the oversold area below the level of 20 on the RSI. It is worth noting that this level on the RSI has already been tested in September and December 2022, and August 2023. Once the indicator values fell below the mark of 20, the stock price rose all three times. The current signal is likely to be no exception. However, if the indicator values are hovering above the level of 20, the stock price could tumble to the key support area of 170 USD.
The development of the uptrend could be supported by a breakout of the upper boundary of the descending corrective channel at approximately 185 USD.
A positive scenario for buyers can be cancelled by a breakout of the lower boundary of the long-term ascending channel with the quotes gaining a foothold below the 160 USD level. In such a case, a decline target could be 130 USD.
- Wamsi Mohan, analyst at Bank of America, predicts that by the end of 2023, the target price for Apple Inc. stock will be 210 USD per unit
- Angelo Zino, analyst at CFRA Research, recommends buying the corporation’s shares, and has set a target price of 220 USD
- Experts at The Motley Fool are confident that the company’s stock will not be able to reach 250 USD by the end of 2023 due to the issuer’s financial performance. They note that the stock value is running the risk of remaining below 180 USD
- Specialists at the Economy Forecast Agency (EFA) predict that the stock price will stand at 152 USD by the end of 2023
- According to the Wallet Investor portal, Apple Inc. shares will hit 169 USD in December 2023
In 2023, the price of Apple Inc.'s stock managed to reach a record high of 198 USD per share, but the news landscape prevented it from sustaining its confident upward momentum. At the same time, the services division’s revenue for Q3 fiscal 2023 reached a record 21.21 billion USD, thanks to the surge in paid subscriptions.
Technical analysis of Apple Inc. shares points to an uptrend and the potential for prices to reach 195-200 USD by the end of 2023. However, the experts mentioned above have provided contradictory forecasts. Some predict the price will surpass 200 USD by the end of the year, while others expect it to drop below 180 USD.