ServiceNow: Third-quarter earnings insights

Ben Singa

Apple reports profits after the launch of iPhone 12, investors continue to pay attention to Big Tech’s leadership

As one of the world’s largest and most widely held companies, Apple (NASDAQ: AAPL) often has a huge impact on the market. This is especially the case in 2020, as high-tech companies occupy market leadership positions and drive larger market ups and downs based on one day. Many investors want economic recovery, which is a top priority for “cyclical” industries such as finance and industry. In addition, some companies that we call “Pandemic Names”, such as Workday Inc (NASDAQ: WDAY), Docusign Inc (NASDAQ: DOCU) and Trade Desk Inc (NASDAQ: TTD) have turned their attention away from the “large cap.” However, AAPL’s recent launch of the iPhone 12 and its stock split have brought the company back into the focus of attention. Apple has never lacked attention when it released the report, even if its earnings competed with the other three “FAANG” stocks. This is the case when Apple opened its fourth-quarter earnings report on Thursday after the market closed, but because CEO Tim Cook’s company still wields a market value of $2 trillion, Apple Anything that is said or done can stand out in a crowded calendar. In the Mac and iPad, a big question to make money is how the new iPhone 12 will look like a few weeks after its release. Since operators offer special offers to attract customers to use their higher-speed products, the switch to 5G may eventually become a rider for iPhone 12. However, as other companies take advantage of 5G, competition at home and abroad may be fierce. , Then how does AAPL view the game? And how many iPhone users will go to the Apple Store of their choice (or online) to replace their phones with a 5G model? Analysts said the early signs look good, but AAPL may have more exposure on Thursday. In addition to more clues about iPhone sales, investors should pay attention to the demand for iPad and Mac. Due to the increase in work at home, entertainment, and study caused by the pandemic, these products were no longer in the spotlight a few years ago, and they will come back to life in 2020. Sometimes these clues can be drawn in advance by checking the performance of the company that manufactures “peripheral equipment” for AAPL products. For example, Barron pointed out, consider Logitech International’s (NASDAQ: LOGI) recently released earnings report, which stated that iPad accessories were up 144% this quarter. This makes some analysts optimistic about the AAPL report date. Service update AAPL used to be mainly a product company, but now these services also have great significance. The service business covers everything from the App Store to licensing transactions, and service revenue is only slightly lower than analysts’ expectations in the third quarter. Analysts may be overly optimistic, because services have indeed increased by nearly 15% over the same period last year, considering that the epidemic has not shown a weak performance. iPhone sales increased by more than 1.6% year-on-year, while Mac sales jumped more than 21%, and iPad sales increased by more than 31%. The average forecast of Refinitiv analysts is a drop of about 2%, which helped Apple report an 11% revenue growth. However, AAPL did not share guidance last quarter. Will you decide to do this this time? If so, it may perform well on Wall Street, where it is eager to gain more corporate insights into 2021 and beyond. A cool-down hot stock Apple’s strong third-quarter earnings performance helped stocks that have recovered everything they lost in the coronavirus-triggering a sell-off earlier this year. The stock was also boosted after the company announced that it would conduct a four-share swap at the end of July. After the split began, the company’s stock price hit a record high at the beginning of last month, but the stock price has been falling since then. . But sometimes buying interest will cool down after the split, in addition to consumer electronics giant AAPL and technology industry component AAPL. In this regard, AAPL has always been an important part of the skyrocketing technology stocks, followed by industry rotation and profit-taking. Last month, technology stocks saw a broader retracement, which caused AAPL stocks and other stocks to fall. Industry (see Figure 1). As technology-related names became popular, after leading the market higher, as investors seemed to decide to take some money from the watch, Gale was eliminated. See more gains in AAPLFIGURE 1: Technical wave and partial retracement. Since the fall of the coronavirus in March 2020, Apple’s (AAPL-candlestick) stock price has been operating at a high level. In general, the same is true for technology stocks (IXT-purple line). Due to profit settlement and industry rotation, both have fallen in recent days. Data source: Nasdaq, S&P Dow Jones Indices. Chart source: TD Ameritrade’s thinkorswim® platform. For illustration purposes only. Past performance does not guarantee future results. Earlier this year, high-tech became a crowded deal as investors flocked to big names hoping to join the sharp rebound. The reason why people initiate such a rebound is because people want to own large stocks, because they want to buy shares and also want the security of large mature participants who benefit during the epidemic. There is also the concept of “cash is king” and that is where AAPL often beats most of its peers. According to company filings, as of the second quarter, AAPL had nearly $200 billion in cash and securities on its balance sheet. In this way, Apple can deal with potential storms (such as a deep recession) and may make one or two strategic acquisitions. The recent correction has put Apple’s stock price well below its record, as we will enter the earnings week later. Although this may seem like an opportunity for cheap deals to some people, the stock has continued to rise strongly this year, and its valuation is much higher than historical normal, which may cause people’s attention. As coronavirus concerns continue, moving the entire market up or down will not necessarily disappear. But there are other factors that are also affecting the tech world, such as antitrust turbulence. Nevertheless, Apple may not be affected by it like other companies, because of the fierce competition between this iPhone manufacturer and other device and computer manufacturers; although from an antitrust point of view, this competition may be a Good news, but Samsung, Alphabet Inc. (NASDAQ: GOOGL) and Microsoft (NASDAQ: MSFT) are still forces that Apple must face, and investors must calculate it. Apple’s earnings and options activity AAPL expects adjusted earnings of US$0.71, which is lower than US$0.76 in the same period last year, according to estimates by third-party consensus analysts. Revenue is expected to be US$64.1 billion, which is basically the same as a year ago. According to the Market Maker Move™ indicator on the thinkorswim® platform, the options market has fluctuated the expected stock price by 3.4% in either direction before and after the earnings release. Looking at the expiration on October 30, the put activity is very heavy, focusing on 110 and 112 blows. Looking upwards, the numbers are even higher. There are 120 calls to make others stand out, but they are also very concentrated at the 115 and 125 execution prices. As of Wednesday morning, the implied volatility was at the 43rd percentile. Note: Call options represent the right to purchase the underlying securities at a predetermined price within a certain period of time, not the obligation. A put option represents the right to sell the underlying security at a predetermined price within a set time, but it is not an obligation. TDAmeritrade® reviews are for educational purposes only. SIPC member. Options involve risks and are not suitable for all investors. Please read the characteristics and risks of standardized options. Image from SaraKurfeß, taken from Benzinga *Click here to view Benzinga’s option transactions* Facebook, Alphabet, Twitter are gaining attention today because the CEO testified on Capitol Hill *The third quarter results are worrying. Did FB deal with boycott ads? (C) 2020 Benzinga.com. Benzinga does not provide investment advice. all rights reserved.