Is Wall Street overreacting to Apple's earnings report?

Though the tech giant made nearly $9 billion in profit last quarter, it missed projections — and grumbling investors are sending Apple's stock price tumbling

Traders work on the floor of the New York Stock Exchange
(Image credit: Mario Tama/Getty Images)

Has Wall Street gone bonkers? This week, Apple reported a hefty $9 billion profit for the third quarter of its fiscal year, up 21 percent from the same quarter in 2011, thanks to rising sales of its iPhone and iPad. However, analysts had expected an even more dazzling hike of 33 percent, and Apple's share price stumbled about 4 percent the day after the earnings report was released. Investors appeared to be primarily concerned that iPhone sales, while strong, are slowing down, with many prospective buyers waiting until a new iteration of the iPhone is unveiled in the fall. Is the stock market overreacting to Apple's earnings report?

No. Apple is facing a leadership crisis: Investors aren't sure there will be "smashing iPhone 5 sales come the holiday shopping season," says Rocco Pendola at The Street. That's because CEO Tim Cook is no Steve Jobs. Apple rarely missed earnings estimates on Jobs' watch, because the late visionary was able "to deliver new products to the public that sell as well as, if not better than, all the products that came before them." Apple's stock is sinking because the "gap between Apple and everybody else continues to close in the Tim Cook era."

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE
https://cdn.mos.cms.futurecdn.net/flexiimages/jacafc5zvs1692883516.jpg

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up
To continue reading this article...
Continue reading this article and get limited website access each month.
Get unlimited website access, exclusive newsletters plus much more.
Cancel or pause at any time.
Already a subscriber to The Week?
Not sure which email you used for your subscription? Contact us