Notable Apple pro explains why shares are down

Apple Inc. (NASDAQ: AAPL) reported Wednesday afternoon its most profitable quarter in history but shares were trading lower by 3%. Notable Apple expert Gene Munster explained on CNBC’s “Fast Money” why the stock fell despite a strong report.

‘Confusion’

The key highlights from Apple’s report include revenue topping $100 billion for the first time ever and a 21% year-over-year revenue growth. Sales across every product category rose at a double-digit rate, including iPhone revenue that rose 17% year-over-year to $65.60 billion.

The company ended the quarter with more than 1 billion active iPhone users and 1.65 billion people are using at least one Apple product. 

Yet Apple’s stock traded lower following the print, although this is due to “confusion,” Munster, a former stock analyst turned venture capitalist said. Specifically, investors were confused with management’s comments on the iPhone channel inventory.

Apple discussed drawing down the inventory and investors assumed the “really good” iPhone metrics isn’t “as good as people thought it was because of the channel inventory drawdown,” he said.

Management clarified during its post-earnings conference call that inventory was drawn down quarter-over-quarter, it was still lower on a year-over-year basis.

“What that means is that there was no game of shuffle to get that good number — it was a real number,” he said. “That’s why the stock kind of dipped a couple of percents.”

Here is a full Invezz.com recap of Apple’s earnings report.

Conference call highlights

One of the more notable takeaways from Apple’s conference call was management’s statement that the Mac business was the only unit that suffered from supply constraints in the quarter, Munster said.

This might suggest Apple will report upside versus future expectations as it catches up.

Another highlight from the quarter was a question from the analyst community that touched on reports of Apple looking to make a car. The question was cleverly posed to CEO Tim Cook and asked how he approaches new addressable markets.

Cook answered that he is looking at providing a great user experience where the company can combine hardware, software, and services.

“I’m not putting the stake in the ground and saying that Apple is going to build a car,” he said. “But I think the leanings are in that direction because the future of a car is just that: hardware, software, and services.”

All put together, Munster said the quarter reinforces his outlook that Apple’s stock has a path towards $200 per share.