Apple 2.0

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Which way will Apple jump in after-hours trading?

October 28, 2013: 3:23 PM ET

It all depends on what Wall Street was expecting. See, for example, the last 40 quarters.

Forty quarters.

Forty quarters.

FORTUNE -- In what is expected to be the biggest business news event of the day, Apple (AAPL) will report its quarterly earnings this afternoon. Here's sequence of events:

  • 4 p.m. Eastern -- The normal trading day ends
  • 4 p.m. -- Trading in Apple may or may not be halted (assume it isn't).
  • 4:30 p.m. or so -- Apple releases its earnings numbers to the business wires
  • 4:30 p.m. -- In so-called after-hours or night trading, the market reacts. Volumes are usually low, so trading can be erratic.
  • 5:00 p.m. -- Apple begins a conference call with analysts
  • 6:00 p.m. -- The conference call ends. By then, the market will have absorbed whatever news was broken in the Q&A.

According to NASDAQ's MT Newswire,

"AAPL has recorded an earnings-driven after-hours gain in 27 of the 40 quarters tracked in our database. The stock added to its after-hours upside in next-day action 11 times, reversed direction 15 times -- or about 60% of the time -- and once remained even with its after-hours move. On the downside, AAPL has recorded 13 earnings-driven after-hours declines -- adding to its negative trade seven times in next-day action, and reversing direction six times."

So what makes the stock jump one or the other? Based on the 10 years of results posted on MT Newswire, the message always seems to be the same: It's a game of expectations.

Here, for example, are the last 8 quarters:

  • On July 23, 2013, AAPL gained 3.4% in night trade after beating Q3 expectations and setting its Q4 revenue guidance in-line to below the Street view. The stock firmed higher the next day, closing the July 24 regular session up 5.1%.
  • On April 23, 2013, AAPL edged up 0.08% in evening trade after beating on Q2 and setting its Q3 revenue view below expectations. The stock dipped into the red the next day, closing down a slim 0.1%.
  • On Jan. 23, 2013, AAPL tumbled 10.3% in night trade after coming in shy on Q1 revenue, beating on earnings, and setting Q2 revenue guidance below the Street view. The stock moved lower the next day, ending the Jan. 24 regular session down 12.3%.
  • On Oct. 25, 2012, AAPL dipped 0.2% in evening trade after coming in shy on Q4 earnings and setting guidance below the Street view. The stock added modestly to its downside the next day, ending the Oct. 26 regular session off 0.9%.
  • On July 24, 2012, AAPL declined 5.1% in night trade after reporting weaker-than-expected results and guidance. The stock narrowed its downside slightly the next day, ending the July 25 regular session off 4.3%.
  • On April 24, 2012, AAPL jumped 6.9% in after-hours trade after trouncing Q2 expectations and issuing Q3 guidance below the Street view. The stock firmed higher the next day, closing the April 25 regular session up 8.8%.
  • On Jan. 24, 2012, AAPL advanced 7.9% in evening trade after blowing past Q1 estimates and setting mixed guidance for Q2. The stock cut its upside the next day, closing the Jan. 25 regular session up 6.2%.
  • On Oct. 18, 2011, AAPL declined 6.6% in after-hours action after missing Q4 earnings estimates and setting Q1 guidance above the Street view. The stock saw its downside narrow slightly the next day, ending the Oct. 19 regular session off 5.5%.

LINK: For all 40 quarters, go here: Apple Historically Rewards Shorts off Earnings-Driven After-Hours Trade.

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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