Over the last three months, Apple grew its revenues by 33%, saw its profits increase by 38% to $10.7 billion, put away more than $202 billion in cash for a rainy day — and yet lost more than $60 billion in market value in just three minutes on Tuesday.
Casual observers might be scratching their heads at news that, at first glance, would suggest the world’s biggest tech company had a bad day despite releasing earnings many companies would be proud to call their own. “Apple iPhone Sales, Up 35%, Disappoint Investors” was the Wall Street Journal‘s initial headline. “Apple Profit Up 38%, but iPhone Sales Disappoint Wall Street” blared The New York Times.
The reason for this initially mind-boggling disparity? Expectations.
Before companies like Apple release their latest earnings reports, analysts try to guess what those numbers might reveal. These analysts, typically employed by brokerage firms, are…
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