What's going on?

Sorry Apple fans, but your favorite brand disappointed investors on Tuesday, as it reported lower profits than expected and said that future revenue wouldn�t be as much as previously thought. The stock sold off 8% immediately following the news � a big decline for the world�s most valuable company.

What does this mean?

Apple isn�t exactly growing � and that has some investors concerned. iPhone sales, which make up two-thirds of the company�s revenue, fell 16% in the most recent quarter versus one year ago. Also, revenue in China, supposedly a big growth area, actually fell quite substantially (down 26% versus the previous year). Part of it was blamed on a decrease in Hong Kong�s tourism, but sales in mainland China were also disappointing – and that�s quite worrying.

Why should I care?

For the stock: Apple�s stock isn�t treated as a �growth� stock anymore. �The good news, sort of, is that the stock actually isn�t valued that highly because investors have low expectations for growth versus, say, Facebook. The stock price suggests that they only really expect Apple to monetize what it already has rather than add some sexy new product. To some extent, these �low� expectations protect the stock from falling too much. This new paradigm can still be quite profitable – for the company and, perhaps, its investors.
The bigger picture: It�s not been a good earnings season for tech. Alphabet, Netflix, Microsoft and a host of other tech companies reported disappointing numbers last week. Apple (and Twitter) followed suit on Tuesday. It�s left to Facebook on Wednesday and Amazon on Thursday to try to turn things around � but it�s sure looking like tech is struggling to achieve the sort of revenue growth and/or profits that have sustained its momentum in previous quarters.