On Tuesday, April 26th, Apple announced its earnings at the end of the trading day. As many were unsurprised to hear, they missed on their projected earnings. The consensus
prediction was that they would announce an earnings number equal to $2.00 per share, but the actual number came in at $1.90 per share.

Given the fact that the U.S. economy in general had a rough first quarter, this is not a surprise at all. However, Apple is under a large microscopic lens thanks to their worldwide ubiquity, and it is not uncommon for popular companies to see bad public reactions when earnings misses are made. This is the first time that Apple has ever seen a year over year decline in revenue, and when this news is taken into consideration along with the host of other problems that Apple has reportedly been facing this year, it’s very easy for the trading public to be bearish on the stock right now.

Apple has a large following, and they have typically been seen as being immune from the downs that the economy has every once in a while, but the fact that they were not immune this particular time has caused a large amount of disappointment in the investing community. The sale of iPhone has dropped by more than 16 percent from this time last year, and this accounted for the largest part of Apple’s revenue this go-around. The company has a strong leadership team, and they have a loyal following of consumers, but right now something needs to change if the company is going to regain the elite status that they had a few years ago. Given a historical context, this is likely to occur, but no one is really sure when it will happen. For now, the stock is dropping in price, and this is exactly what should happen. Long term investors should be excited about this, really, as this current selloff is creating a larger window of opportunity when it comes to future profits. If you currently do not own any stake in the company, that is. It will take some time before this happens, though.

It’s also worth noting that Apple has increased its dividend by about 10 percent recently, which takes away from the amount of capital that the company holds.
This can do nothing but increase the decline in price that the stock has seen, at least until traders become more confident in the company.Long term analysis says that Apple is still a strong company.

They are likely to see some major declines as a result of the recent news. In fact, in afterhours trading on Tuesday, Apple’s stock was down by more than 8 percent at one point. According to many estimates, Apple is likely to go up about 20 percent once it reaches a bottom, but the problem is that a bottom hasn’t been hit. This creates an interesting dilemma for traders. If you are trading, your long term action should involve using call options, but for the next few weeks, you will want a strategy that involves primarily put options. Typically, traders should not ever trade against the overall trend, but this is a unique situation where the short term trend is moving down, and the long term trend hasn’t yet manifested itself. As you take out positions on this company, keep this in mind. Your strategy with this needs to be a dynamic one, and you need to keep an eye on trader sentiment so that you can have a strong idea of when things will change from bearish to bullish.