Apple is in serious danger of no longer being a $1 trillion company

  • Apple is in danger of losing its $US1 trillion market cap.
  • Shares in Apple slid by more than 7% in after-hours trading following the company’s third-quarter earnings announcement.
  • Investors may have been spooked by a big miss on iPhone sales as well as a soft revenue forecast for the next quarter.
  • Still, after-hours trading doesn’t officially affect a company’s market cap, and it all comes down to what happens Friday morning when markets open again.

Wall Street was unimpressed with Apple’s latest quarterly earnings results, announced Thursday– so much so that shares plunged over 7% after the bell, putting Apple in danger of losing its much-vaunted market cap of $US1 trillion.

At the time of writing, Apple stock was priced at $US206.30 in after-hours trading – and still moving. Should the price hold below $US207.45 through Friday’s opening bell, Apple will have a market cap below $US1 trillion.

Notably, the $US207.45 threshold could actually move higher by the time markets open Friday. Apple reported Thursday that it bought back a hefty number of its shares in the previous quarter. That means Apple on Friday will update the number of shares it has outstanding, which will have an effect on its market cap.

Apple made headlines earlier this year when it became the first American company to reach a $US1 trillion market cap.

While Apple’s earnings beat Wall Street expectations on both the top and bottom lines, there appear to be two main sources for the investor negativity.

First, Apple whiffed on iPhone sales. Apple sold 46.9 million iPhones in the quarter, well short of Wall Street expectations for 48.4 million. Apple also announced on Thursday that it would stop breaking out iPhone, Mac, and iPad unit sales.

Second, Apple gave a lower-than-expected revenue forecast for the holiday quarter of this year. Apple projects that it will generate $US89 billion to $US93 billion in revenue for the quarter ending in December. Wall Street was expecting Apple to project revenue of about $US93 billion, placing the company’s estimates on the low end.

Still, for better or for worse, nothing can happen to Apple’s $US1 trillion valuation until Friday morning: A company’s market cap isn’t affected by after-hours trading, and it all comes down to how investors are feeling by the time the opening bell rings.

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