Apple's share price conundrum!
Apple sold over 200 million phones in 2015. At an average price of over $600. A staggering number, whichever way you see it. And made a huge 40% profit share on those sales.
Apple share price however, is languishing, because it is almost impossible for Apple to beat their 2015 performance. And even if they manage to beat those numbers in 2016, it will be almost impossible to beat the 2016 numbers. Basically, at some point, Apple would hit "Peak iPhone".
Apple could sell 180 million phones a year for the next 10 years, and make more than enough profit to buy back all the shares of the company - but in Wall Street arithmetic, it would still not be good.
If Apple had sold only 120M phones in 2015, and if Wall Street had visibility of Apple increasing its sales on a consistent basis to hit 200 million over the next 10 years, that would actually give Apple a better multiple on their shares - and the shares would probably be trading higher than where they are today!
Go figure!!
Apple share price however, is languishing, because it is almost impossible for Apple to beat their 2015 performance. And even if they manage to beat those numbers in 2016, it will be almost impossible to beat the 2016 numbers. Basically, at some point, Apple would hit "Peak iPhone".
Apple could sell 180 million phones a year for the next 10 years, and make more than enough profit to buy back all the shares of the company - but in Wall Street arithmetic, it would still not be good.
If Apple had sold only 120M phones in 2015, and if Wall Street had visibility of Apple increasing its sales on a consistent basis to hit 200 million over the next 10 years, that would actually give Apple a better multiple on their shares - and the shares would probably be trading higher than where they are today!
Go figure!!