Even as Apple’s quarterly revenues grew by 33% and profits surged 38% to $10.7 billion, the company lost more than $60 billion in market value during a three-minute span Tuesday, Time magazine reports.
The reason? According to Time, it’s all about expectations.
“Apple is perhaps a victim of its own success,” Time reports. “It routinely beat earnings estimates over the last four quarters, setting high expectations this time for another rout.”
The piece notes that after Apple reported its earnings, The Wall Street Journal ran the headline “Apple iPhone Sales, Up 35%, Disappoint Investors,” while The New York Times went with “Apple Profit Up 38%, but iPhone Sales Disappoint Wall Street.”
All that disappointment triggered a selloff.
Time explains: “Apple missed the mark on its closely watched iPhone sales. The 47.5 million units it sold, while still a third quarter record, was below the estimate of around 50 million units. And while iPhone sales grew by 35%, that figure was down from the 40% growth in the previous quarter and the 46% growth two quarters earlier. Apple’s own forward-looking revenue projections, too, came in below Wall Street expectations — hence the bad vibes after Tuesday’s earnings report.”
Here’s a clip from Fortune magazine about the history of the iPhone: