Understanding why Apple's $13 is worth 43% less than Netflix's $0.13 can help some investors start on a journey to make money by the boatload in the stock market. On Wednesday, both Apple (NASDAQ:AAPL) and Netflix (NASDAQ:NFLX) reported earnings after the close. Apple earned $13.81 per share for the quarter; Netflix earned $0.13 for the quarter. Apple stock promptly fell over $50; Netflix stock went up about $40.
The differential between the performance of two stocks after their earnings announcements in after-hours trading may seem mind-boggling to some investors. Just imagine if you were short Apple and long Netflix going into earnings, you would have realized 43% gain in 90 minutes. The chart tells the story better than 1000 words can describe. Apple generated $54.5 billion in sales in just 90 days. Apple sold 47.8 million iPhones, a remarkable achievement by any measure. Apple's cash now stands at $137.1 billion. Just cash alone is now about one third of Apple's market cap.
Netflix's earnings came at $0.13 vs. consensus of a loss of $0.13. This is a beat of $0.26. Revenue came in at $945 million compared to consensus of $934 million.
Netflix added 2.1 million new streaming customers in the U.S. for a total of 27.2 million. This is better than expectations. Surprisingly, the company has managed to hold on to its DVD subscribers.
The market hated Apple's earnings, but loved Netflix's earnings. To the uninitiated, it may seem perverse. However, there is sound logic to it. Once an investor learns this logic, money can be made repeatedly using this logic on almost any stock.
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