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Apple, Inc to split stock 7-1 after Friday June 6 market close - Page 3

post #81 of 113
Quote:
Originally Posted by "oberpongo 
It's like I don't mind if gas prices go up or down. I always fill for $50;-)

I guess that accomplishes some price averaging, but that would work even better in $10 increments--or heck, a buck at a time. Whatever the amount, it's inefficient in terms of how often you have to go to the station.
What's your motivation? Or is it just habit?
post #82 of 113
Quote:
Originally Posted by melgross View Post


I'd like to see it break $650. I don't know if it's a real psychological barrier or not.

 

I'm guessing we'll see a dramatic jump in the morning, like we've seen every morning for the past week. I have no intentions on selling anyway, but this is the new pattern (at least until the split).

 

Are you planning any buy-sell activity? I just buy and hold everything.

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post #83 of 113
Quote:
Originally Posted by SpamSandwich View Post
 

 

I'm guessing we'll see a dramatic jump in the morning, like we've seen every morning for the past week. I have no intentions on selling anyway, but this is the new pattern (at least until the split).

 

Are you planning any buy-sell activity? I just buy and hold everything.

 

AAPL is very overbought at this moment so it could be a buy on rumor sell on news type of day.

 

[sorry... I said oversold originally but I meant to say overbought. I'll blame it on age]


Edited by island hermit - 6/6/14 at 8:22am
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post #84 of 113
Quote:
Originally Posted by sog35 View Post


 are you insane?

That would be a 61% increase in share price in ONE DAY.
That would be $335,000,000,000 of additional market cap in one day.

not going to happen.

I'd be happy if we see $100 before Sept

They would have over a trillion $ market cap at $150, which will likely happen within the next 2 years. Apple will continually take shares off the market so $150 within 2 years isn't far-fetched. Right now, they're valued at around $560B, but a year ago before the buy backs, Apple would be valued at around $650B at the current share price of $650.

The govt will eventually pass legislation allowing for a repatriation holiday. If they don't, trillions of profits will be held in other countries indefinitely. So, Apple's cash overseas of $100B plus will someday be worth just that. Apple valued at around $400B ex-cash right now is cheap. Starting this September, Apple could earn $70b over a 12-month span. Not too shabby for being valued at 6 times earnings.

The only problem I see going forward is the law of large numbers. Hard to grow a company organically at 10% when that 10% is more than 99% of what global corporations are worth. Apple's refusal to buy revenue could be it's downfall a few years down the road.
post #85 of 113
Quote:
Originally Posted by Constable Odo View Post

Apple shares completely lost momentum and will be unlikely to reach $650 pre-split.  Without any new hardware, even with the split coming, investors aren't going to give away any more money to Apple to drive up the share price.  Investors are busily pouring money into Amazon because of the Amazon smartphone with the revolutionary 3D UI and half-dozen cameras.  Investors see the Amazon smartphone far more exciting than Apple's iPhone 6.  Most of Wall Street is rather certain Jeff Bezos doesn't make mistakes and this new smartphone will greatly cut into iPhone market share.  Amazon will probably offer it at a very low cost and provide lots of free initial content for it just to get consumers to buy it.  It's quite amazing that only a short teaser of the Amazon smartphone has been shown and already Wall Street is going crazy over it.  A 5% share price pop for an unannounced smartphone is only something Amazon could pull off.  Wall Street really has a lot of faith in Amazon.

They tried the same strategy in the tablet market and they failed. Apple still sells 20x more iPads each qtr. Sure, Amazon will cost Apple a few million iPhone sales a qtr, but in the grand scheme of things, Amazon entering the smartphone market means very little to Apple.
post #86 of 113
Quote:
Originally Posted by WelshDog View Post
 

Who are Gisele and Tom Brady?

Isn't Gisele a princess in Disney's ENCHANTED?

And Tom Brady... wasn't he the 38th mayor of Los Angeles?

Why they owned a mansion together is beyond me.  

As is why it's newsworthy for posting on AI.

 

--------------

EDIT: I guess I was thinking of Giselle and Tom Bradley.  ;)

post #87 of 113

After the stock split, would next week's ~$80. price be an ideal time for Apple to take more shares off the market? They still have several billion $$$ allocated for stock buyback that was authorized at the last shareholder meeting. In which case, if people are considering a stock purchase at the new price, they shouldn't wait too long making up their mind...

post #88 of 113
Quote:
Originally Posted by OcelotWreak View Post
 

After the stock split, would next week's ~$80. price be an ideal time for Apple to take more shares off the market? They still have several billion $$$ allocated for stock buyback that was authorized at the last shareholder meeting. In which case, if people are considering a stock purchase at the new price, they shouldn't wait too long making up their mind...

 

I would wait until the stock gets oversold. Right now it is overbought and is bound to go down somewhat.

 

Right now I believe we're seeing "sell on news"... which would be news of the stock split.

 

In the short term it could get dicey for anyone who buys right now but in the long term I really believe that we're going to see at least $700 ($100 post split) and most likely higher... on iPhone sales alone.

 

... but I'm just some guy on the internet.

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post #89 of 113
Not the dramatic jump I thought there would be this morning. I guess it's sit back and wait for the split time.

Proud AAPL stock owner.

 

GOA

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post #90 of 113
Quote:
Originally Posted by OcelotWreak View Post
 

After the stock split, would next week's ~$80. price be an ideal time for Apple to take more shares off the market? They still have several billion $$$ allocated for stock buyback that was authorized at the last shareholder meeting. In which case, if people are considering a stock purchase at the new price, they shouldn't wait too long making up their mind...

 

We won't see $80 ever again.

 

In a few weeks $100 will be the price the buyback will be defending.  Apple has $45,000,000,000 for buybacks from now till the Sept2015.

 

Keep it simple:

 

2015 estimated EPS $7.15 x 16 PE = $115 target price

post #91 of 113
Quote:
Originally Posted by Tallest Skil View Post
 

$650 at close, anyone? $660?

 

$645.57.

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post #92 of 113
Quote:
Originally Posted by Benjamin Frost View Post
 

 

$645.57.

 

High for the day was $651.26.

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post #93 of 113
Quote:
Originally Posted by Magic_Al View Post

Will anybody freak out on Monday if they don't know about the split and see Apple's stock price displayed out of context?

 

 

Of course. Bloomburg will pile in with how the stock has plummeted by $600 and say that Apple has reached fair value. Failing that, the mainstream media will be sure to get in a snarky joke to the same effect, just so as to fling some mud at Apple, no matter how ridiculous the reason.

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post #94 of 113
Quote:
Originally Posted by Benjamin Frost View Post
 

 

 

Of course. Bloomburg will pile in with how the stock has plummeted by $600 and say that Apple has reached fair value. Failing that, the mainstream media will be sure to get in a snarky joke to the same effect, just so as to fling some mud at Apple, no matter how ridiculous the reason.

 

I'm just guessing, but I think this stock split has been widely advertised so I'm expecting a lot of average investors to pile in on Monday.

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post #95 of 113
Quote:
Originally Posted by PatchyThePirate View Post
 
Quote:
Originally Posted by melgross View Post

I'm giving you a warning.

I don't understand this. pazuzu is clearly a troll and does nothing but bash apple, derail threads, or post inane stuff. He contributes nothing. I don't get why 1) Slurpy is being warned for calling him out or 2) why pazuzu has not yet been banned.

 

I think Slurpy's attack was too directly personal. I would hate for Slurpy to get banned, but I'm with melgross on this.

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post #96 of 113
Quote:
Originally Posted by Eric38 View Post
The govt will eventually pass legislation allowing for a repatriation holiday. If they don't, trillions of profits will be held in other countries indefinitely. So, Apple's cash overseas of $100B plus will someday be worth just that. Apple valued at around $400B ex-cash right now is cheap. Starting this September, Apple could earn $70b over a 12-month span. Not too shabby for being valued at 6 times earnings.

While I agree that Congress will eventually pass some sort of tax reform which will include some form of repatriation holiday for existing cash, I don't think it'll be a 0% rate holiday. It'll be something more like 10%. However, investors should know since Apple has already accounted for the balance of US corporate taxes on about 2/3rds of that foreign income, then, a lower rate than what Apple has accounted for, will mean a one-time increase in Apple's EPS. That's because Apple will recapture some of that income they had already set aside for taxes on their books. Also, corporate tax reform has long-term implications for the stock, as Apple's current effective tax rate is 26%, any rate chosen that is less, like 20%, will result in higher net income. Obviously higher net income should result in higher share prices.

post #97 of 113
Quote: Except that all these sizes have a hidden "00".  So those 100 shares are really 10000 and the 12 is 1200.
Originally Posted by Apple ][ View Post
 

When you look at the realtime trades for AAPL being executed, you'll see that all sorts of random share lots are being traded every minute. Of course round numbers like 50,100,200 are common to see, but you'll also see plenty of odd numbers too.

 

These are the last trades for AAPL made right now at around 3 PM -

 

post #98 of 113
Quote:
Originally Posted by melgross View Post

It's interesting to note that when Buffet was recently asked why he didn't want to split his stock, he gave the very same answer; variability.

That's why I figured they'd be better off doing a stock merge than a split. Apple was worried about the stock volatility. While a split could push it up, I could see much wilder swings in value coming from this move. If they'd pushed the price up to the thousands, you wouldn't get people fooling around with the trades nearly so much. It should fluctuate more slowly.
Quote:
Originally Posted by melgross 
I'd like to see it break $650. I don't know if it's a real psychological barrier or not.

The stock should really reflect Apple's earning potential.

Apple's net income has been:

2009 $8,2b; 2010 $14b; 2011 $25.9b; 2012 $41.7b; 2013 $37b

It fell last year. Going by recent 2014 quarters, it's been roughly flat vs last year. If they keep earning around $40b for 5 years, they have $200b more plus their current $120b assets. That's $320b actual cash in 5 years. They currently have a market cap of $556b and this seems on the high side.

Exxon has close to the same net income:

2009 $19.2b; 2010 $30.4b; 2011 $41b; 2012 $44.9b; 2013 $32.6b

Their revenues are more than double Apple's and they have more assets ($182b). Exxon's market cap is $436b.

It seems like this will be another pump and dump. Small-time investors will be pushed into paying more for their small shares to push the price up. The big owners will profit from selling at the higher price but their selling volumes will help tank the price back down. The small-time investors are left with broken dreams from their handful of shares and the market movers pay off their 7th homes.

Apple stock is overpriced at the moment relative to their earnings. It won't be able to sustain this long term. A few people clearly got burned when it dropped from 700 because they weren't quick enough to sell at the peak. Those people who still held on will be waiting for this point again to sell because now they know what the peak was - it'll be a nice round $100. They'll probably do this in some timeframe around the iPhone 6 event after months of misleading articles from unnamed sources.
post #99 of 113
Quote:
Originally Posted by Marvin View Post
 
Quote:
Originally Posted by melgross View Post

It's interesting to note that when Buffet was recently asked why he didn't want to split his stock, he gave the very same answer; variability.

That's why I figured they'd be better off doing a stock merge than a split. Apple was worried about the stock volatility. While a split could push it up, I could see much wilder swings in value coming from this move. If they'd pushed the price up to the thousands, you wouldn't get people fooling around with the trades nearly so much. It should fluctuate more slowly.
Quote:
Originally Posted by melgross 
I'd like to see it break $650. I don't know if it's a real psychological barrier or not.

The stock should really reflect Apple's earning potential.

Apple's net income has been:

2009 $8,2b; 2010 $14b; 2011 $25.9b; 2012 $41.7b; 2013 $37b

It fell last year. Going by recent 2014 quarters, it's been roughly flat vs last year. If they keep earning around $40b for 5 years, they have $200b more plus their current $120b assets. That's $320b actual cash in 5 years. They currently have a market cap of $556b and this seems on the high side.

Exxon has close to the same net income:

2009 $19.2b; 2010 $30.4b; 2011 $41b; 2012 $44.9b; 2013 $32.6b

Their revenues are more than double Apple's and they have more assets ($182b). Exxon's market cap is $436b.

It seems like this will be another pump and dump. Small-time investors will be pushed into paying more for their small shares to push the price up. The big owners will profit from selling at the higher price but their selling volumes will help tank the price back down. The small-time investors are left with broken dreams from their handful of shares and the market movers pay off their 7th homes.

Apple stock is overpriced at the moment relative to their earnings. It won't be able to sustain this long term. A few people clearly got burned when it dropped from 700 because they weren't quick enough to sell at the peak. Those people who still held on will be waiting for this point again to sell because now they know what the peak was - it'll be a nice round $100. They'll probably do this in some timeframe around the iPhone 6 event after months of misleading articles from unnamed sources.

 

What your figures say to me is that Apple's net income overtook Exxon's last year; Exxon had the higher net income for the earlier four years. If the market thinks that Exxon will regain the lead for the next five years, it will price the companies accordingly. So far, it doesn't. 

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post #100 of 113
Quote:
Originally Posted by Marvin View Post
Their revenues are more than double Apple's and they have more assets ($182b). Exxon's market cap is $436b.

It seems like this will be another pump and dump. Small-time investors will be pushed into paying more for their small shares to push the price up. The big owners will profit from selling at the higher price but their selling volumes will help tank the price back down. The small-time investors are left with broken dreams from their handful of shares and the market movers pay off their 7th homes.

Apple stock is overpriced at the moment relative to their earnings. It won't be able to sustain this long term. A few people clearly got burned when it dropped from 700 because they weren't quick enough to sell at the peak. Those people who still held on will be waiting for this point again to sell because now they know what the peak was - it'll be a nice round $100. They'll probably do this in some timeframe around the iPhone 6 event after months of misleading articles from unnamed sources.

So, Exxon has smaller margins than Apple, and they're in a more capital intensive business.

 

I wouldn't worry too much about "small-time investors" and their "broken dreams", since you state they only have a "handful of shares". As for big owners profiting, only a small fraction of Apple's float gets traded in a week, and over 60% is held by institutions, so it's the big owners who are also holding the bag as the price swings up and down.

 

How exactly are Apple's shares "overpriced at the moment relative to their earnings"? Are you saying that the Price to Earnings is too high? Have you looked at any other companies lately?

post #101 of 113
Quote:
Originally Posted by KenC View Post

So, Exxon has smaller margins than Apple, and they're in a more capital intensive business.

Why would margins affect the valuations? It's about how profitable the company is for investors.
Quote:
Originally Posted by KenC View Post

I wouldn't worry too much about "small-time investors" and their "broken dreams", since you state they only have a "handful of shares".

There's obviously going to be more of them though. Take this guy who scammed 1500 investors out of tens of millions:

http://www.news.com.au/finance/real-estate/wolf-of-wall-street-jordan-belfort-says-he-will-pay-victims-back/story-fncq3era-1226940120176

The little guys only had tens of thousands invested but there were a lot of them. They took their fees, put assets in their wives' names, screwed investors and made off with the money. They went to prison for a short time but now this guy is selling his lies on how to get rich to a crowd of thousands waiting to be like him for $1000 per person. He says he'll make $100m this year from speaking.

Investors won't lose all their money investing in Apple but the potential gains are vastly exaggerated at this point.
Quote:
Originally Posted by KenC View Post

As for big owners profiting, only a small fraction of Apple's float gets traded in a week, and over 60% is held by institutions, so it's the big owners who are also holding the bag as the price swings up and down.

Not their money though. Most big investors are hedge funds and mutual funds. The brokers get the fees no matter what happens:

http://www.forbes.com/sites/stevedenning/2013/05/28/how-hedge-funds-transfer-wealth-from-investors-to-managers/

"From 1998 to 2010, hedge fund managers earned $379 billion in fees. The investors of their funds earned only $70 billion in investing gains.

Managers kept 84 percent of investment profits, while investors netted only 16 percent.

One-third of hedge funds are funded through feeder funds and/or fund of funds, which tack on yet another layer of fees. This brings the industry fee total to $440 billion. That’s 98 percent of all the investing gains, leaving the people whose capital is at risk with only 2 percent, or $9 billion."

http://247wallst.com/investing/2014/06/02/goldman-sachs-identifies-top-10-hedge-fund-stocks/

"Apple Inc. (NASDAQ: AAPL) remains a top stock on the Goldman Sachs list. Excitement over the new iPhone 6 is starting to gain traction as rumors of a larger screen and other new improvements are getting the Apple nation stirred up. Plus with a huge earnings beat, a stunning seven-for-one stock split, an increased dividend and share buyback, the company seems right back on its game. There is chatter that something big is in the works as the company is going to live-stream its big keynote address this year. Trading at just 12 times forward earnings, the stock remains a solid buy for investors. Shareholders are paid a 2.1% dividend. The consensus price target for Apple is $642.42. The stock closed Friday at $633."

Listen to how pathetic that language is, as if Apple was ever off their game. They've been operating exactly the same way for years but now that they pandered to investors, the company is doing better in their eyes. Egocentric parasites.

http://www.marketwatch.com/story/4-hedge-funds-heavily-invested-in-apples-fate-2013-11-04
http://www.factset.com/insight/2014/2/hedgefund_ownership_2.19.14

"In Q4 2013, the 50 largest hedge funds bought AAPL, CCI, and TWTR; sold LYB, EQIX"
Quote:
Originally Posted by KenC View Post

How exactly are Apple's shares "overpriced at the moment relative to their earnings"? Are you saying that the Price to Earnings is too high? Have you looked at any other companies lately?

It's nothing to do with the P/E ratio. This is just a measure of future growth. You can't assess Apple's future earnings growth potential because some stat is too low. P/E is a meaningless stat when it comes to stock value changes as other stocks show very clearly. Amazon's P/E is crazy and yet they have similar stock price gains to Apple. Apple's P/E is the same as Microsoft's. Nobody would suggest investing in Microsoft based on the P/E ratio so why do it with Apple? Apple's not a startup any more and their growth has slowed down considerably. They are currently valued at nearly 30% higher than the next wealthiest company in the world and people are thinking higher, higher.

Stock goes up, stock comes down, stock goes up, stock comes down. This happens as the market determines Apple's intrinsic value. It went to 700, too high, it went to just under 400, too low, it's going back up again and it'll crash back down again. I reckon it'll settle around the 500 mark. IMO, that value seems to match up to their earnings. The mobile devices market is saturated and growth is slowing down for everyone.
post #102 of 113
Marvin,

How much investing success have you had following those theories?

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post #103 of 113
Quote:
Originally Posted by Marvin View Post

Why would margins affect the valuations? It's about how profitable the company is for investors.
There's obviously going to be more of them though. Take this guy who scammed 1500 investors out of tens of millions:

Wow, incredible post, it's going to take a little time to respond.

 

As for the above, you basically stated that Apple and Exxon were neck and neck in terms of earnings, but that Exxon had greater sales and assets, implying that was somehow better and thus Exxon deserved the higher valuation. I just pointed out that the flip side of what you wrote is that Exxon's margins were much smaller than Apple's. While the bottom line is literally profits, what directly affects those profits is margins. It's just being argumentative to pretend that margins don't have an effect upon valuations, as margins go directly into the NPV calculations of future cash flows.

 

As for the guy who scammed 1500 investors, what exactly does that have to do with Apple's share split? Where are these investors getting scammed? They may be buying at a relatively high price to where the stock was at a little while ago, but they buy Apple shares knowing exactly what Apple's past earnings have been and where the road is going. There's no scam involved.

 

What "potential gains" are you referring to? You have to be specific, otherwise you've just created a straw man argument. I did not make any reference to potential gains, so I didn't exaggerate a thing. However, even if you buy Apple at what you consider a pumped up price, the buyer will still get a dividend that will likely grow every year, as is Apple's habit, innovate and iterate. Apple's share price is still low by all fundamental metrics, so if anything, it will likely trade in a range around where it is today. How are investors going to be scammed?

 

As for big investors being hedge funds and mutual funds, what difference does it make to the original point? Your premise was that this was a pump and dump by big investors. I pointed out that since 60 to 70% of Apple shares are held by big investors, the ones doing the pump and dump are also doing it to those same big investors.

 

Specifically, why are you concerned with investors paying fees to hedge fund managers? Do you know the size of investors who put money with a hedge fund? They're all BIG investors, not little ones putting in tens of thousands as your first example above about 1500 scammed investors.

 

As for the actual numbers, that's an interesting study and should give those BIG investors pause for thought. However, they go into those deals with their eyes open as well. The usual deal is 2 and 20. That's 2% mgmt fee and 20% of any profit. As for those people investing into feeder funds and fund of funds, they're fools. And again, those people are large investors, with minimum amounts required, which are all much larger than any of your small investors would have to place.

 

Quoting 247wallst is a huge mistake. That site is a total farce. It's a news aggregator living off others. Don't waste your time giving it hits. Who listens to 247wallst? Of course it's pathetic. Do you think that quote was from GS? It's not written that way at all. They just cite Apple being on the top hedge fund asset list. The silly commentary is from 247.

 

As for your last comment, I directly quoted you!

 

"overpriced at the moment relative to their earnings"

 

YOU were the one making the comparison between price and CURRENT earnings. Duh!

 

I NEVER  suggested anyone invest in Apple based upon its PE ratio, that's a straw man.

 

It's great and all that you have some price predictions, but how exactly did you calculate it. You don't show any evidence of how $500 matches "up to their earnings"? Of course you are talking future earnings, but never show what you believe them to be. Then again, the words "seems to match up to their earnings", doesn't read like future, but more like past and present. 

post #104 of 113
Quote:
Originally Posted by KenC View Post

It's just being argumentative to pretend that margins don't have an effect upon valuations, as margins go directly into the NPV calculations of future cash flows.

If someone has 90% margins but net income of $100m, they aren't going to be valued more highly than Apple with ~20-25% net margins. It comes down to the amount of profit. Apple and Exxon are pretty even when it comes to profitability. Exxon's lower margins don't matter, it's how much the margins change. Both company's margins are staying pretty steady. I certainly don't see that Apple should be valued 30% higher than Exxon when their earnings don't reflect that.
Quote:
Originally Posted by KenC View Post

Where are these investors getting scammed? They may be buying at a relatively high price to where the stock was at a little while ago, but they buy Apple shares knowing exactly what Apple's past earnings have been and where the road is going. There's no scam involved.

What "potential gains" are you referring to?

It's at $645 just now, it peaked at $700. If a small investor invested now, say $20k, they'd stand to gain $1705 minus fees etc if it reached the same peak as before. It's hardly a hot growth stock. The scam is overhyping potential gains in order to push investors into buying at a higher price:

http://www.thestreet.com/story/12180008/1/apple-to-1000-in-2014.html

"Some investors were getting too emotional, irresponsibly egged on by Wall Street analysts such as Brian White, who had a cutesy $1,111 price target, and Gene Munster, who couldn't stop talking out of his rear with empty Apple TV predictions."

Morgan Stanley was talking about $17.5b in the first year for an iWatch:

http://appleinsider.com/articles/14/02/04/morgan-stanley-sees-iwatch-ringing-up-175b-from-iphone-users-in-first-year

They are blatantly lying about Apple's future products and pulling out so many false sales figures to push people into buying the stock. When analysts knowingly lie to potential investors, that's a scam.
Quote:
Originally Posted by KenC View Post

Apple's share price is still low by all fundamental metrics

What should it be and why?
Quote:
Originally Posted by KenC View Post

As for your last comment, I directly quoted you!

"overpriced at the moment relative to their earnings"

YOU were the one making the comparison between price and CURRENT earnings. Duh!

I should have clarified that. I was of course suggesting the P/E was too high and you were saying it was too low and then I said it was an irrelevant metric. Basically, I'm saying that it's not significant if the P/E ratio is seen as too low because right now, Apple is a big company with little potential earnings growth.

The figure is meaningful for a startup company because with high earnings, they can grow their income by growing their business. Apple has dominated the premium industry so there's little room to grow further and this is not a bad thing. They are at the top. People don't have to be disappointed if Apple merely stays number 1 and doesn't significantly grow their earnings.

There's a conflict here between Apple's core values and those of investors. Investors just want more, more, more. Apple doesn't work like that. If they don't think some tacky wrist device is the right thing to do, they won't do it to simply chase after a bit extra profit. That annoys analysts and the like because it's all they know.

All I'm suggesting is that people don't get too carried away with the OMG stock split, the stock is going to $800 ($114 after the split) etc. Be realistic about what the gains are going to be at this point. I could see the iPhone 6 and maybe even the Beats deal impressing some people to push the stock higher than it is now but I don't think that valuation would be accurate for Apple going forward.
post #105 of 113
Quote:
Originally Posted by Marvin View Post

Quote:
Originally Posted by KenC View Post

It's just being argumentative to pretend that margins don't have an effect upon valuations, as margins go directly into the NPV calculations of future cash flows.

If someone has 90% margins but net income of $100m, they aren't going to be valued more highly than Apple with ~20-25% net margins. It comes down to the amount of profit. Apple and Exxon are pretty even when it comes to profitability. Exxon's lower margins don't matter, it's how much the margins change. Both company's margins are staying pretty steady. I certainly don't see that Apple should be valued 30% higher than Exxon when their earnings don't reflect that.
Quote:
Originally Posted by KenC View Post

Where are these investors getting scammed? They may be buying at a relatively high price to where the stock was at a little while ago, but they buy Apple shares knowing exactly what Apple's past earnings have been and where the road is going. There's no scam involved.

What "potential gains" are you referring to?

It's at $645 just now, it peaked at $700. If a small investor invested now, say $20k, they'd stand to gain $1705 minus fees etc if it reached the same peak as before. It's hardly a hot growth stock. The scam is overhyping potential gains in order to push investors into buying at a higher price:

http://www.thestreet.com/story/12180008/1/apple-to-1000-in-2014.html

"Some investors were getting too emotional, irresponsibly egged on by Wall Street analysts such as Brian White, who had a cutesy $1,111 price target, and Gene Munster, who couldn't stop talking out of his rear with empty Apple TV predictions."

Morgan Stanley was talking about $17.5b in the first year for an iWatch:

http://appleinsider.com/articles/14/02/04/morgan-stanley-sees-iwatch-ringing-up-175b-from-iphone-users-in-first-year

They are blatantly lying about Apple's future products and pulling out so many false sales figures to push people into buying the stock. When analysts knowingly lie to potential investors, that's a scam.
Quote:
Originally Posted by KenC View Post

Apple's share price is still low by all fundamental metrics

What should it be and why?
Quote:
Originally Posted by KenC View Post

As for your last comment, I directly quoted you!

"overpriced at the moment relative to their earnings"

YOU were the one making the comparison between price and CURRENT earnings. Duh!

I should have clarified that. I was of course suggesting the P/E was too high and you were saying it was too low and then I said it was an irrelevant metric. Basically, I'm saying that it's not significant if the P/E ratio is seen as too low because right now, Apple is a big company with little potential earnings growth.

The figure is meaningful for a startup company because with high earnings, they can grow their income by growing their business. Apple has dominated the premium industry so there's little room to grow further and this is not a bad thing. They are at the top. People don't have to be disappointed if Apple merely stays number 1 and doesn't significantly grow their earnings.

There's a conflict here between Apple's core values and those of investors. Investors just want more, more, more. Apple doesn't work like that. If they don't think some tacky wrist device is the right thing to do, they won't do it to simply chase after a bit extra profit. That annoys analysts and the like because it's all they know.

All I'm suggesting is that people don't get too carried away with the OMG stock split, the stock is going to $800 ($114 after the split) etc. Be realistic about what the gains are going to be at this point. I could see the iPhone 6 and maybe even the Beats deal impressing some people to push the stock higher than it is now but I don't think that valuation would be accurate for Apple going forward.


You sure have a pessimistic view of Apple!

You've clearly given this topic a lot of thought, and I think you're wrong. There is no fair value for a stock. Why is Amazon at over 500 P/E? It's been like that for some years. I think it's due to crash, but so have others, and they've been wrong for years, too. Maths will only take you so far. If you look at the chart for Apple shares over the past ten years, it doesn't really bear any close relation to Apple's fortunes on an annual basis.

I feel that Apple is 'just getting started' to quote Tim Cook, and that their shares will perform very well for the foreseeable future. The only thing that would bring them crashing down is a worldwide recession, and even then, I would hold on to the shares now that they are paying a dividend.
“I wasted time, and now doth time waste me.”
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“I wasted time, and now doth time waste me.”
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post #106 of 113
Quote:
Originally Posted by Marvin View Post

All I'm suggesting is that people don't get too carried away with the OMG stock split, the stock is going to $800 ($114 after the split) etc. Be realistic about what the gains are going to be at this point. I could see the iPhone 6 and maybe even the Beats deal impressing some people to push the stock higher than it is now but I don't think that valuation would be accurate for Apple going forward.

Don't you think that on Monday, early, there will be a lot of movement - probably both up and down?  This will be due to emotions and excitement, not news or performance.

post #107 of 113
Quote:
Originally Posted by Benjamin Frost View Post

You sure have a pessimistic view of Apple!

The people with the pessimistic view of Apple are the ones who think Apple stock needs to rise dramatically forever in order for the company to be considered a success. I consider them a huge success even if their stock goes down to $400. I don't think that's pessimistic. Like I say, not growing forever is not a bad thing.
Quote:
Originally Posted by WelshDog 
Don't you think that on Monday, early, there will be a lot of movement - probably both up and down? This will be due to emotions and excitement, not news or performance.

This all happened before. In the run up to $700, people were trying to keep the momentum going and saying really stupid things:

http://www.forbes.com/sites/ericjackson/2012/03/21/why-apple-will-hit-1650-by-the-end-of-2015/

"We’re at $600 now, but I think Apple has much further to go from here. If things play out as I expect, Apple will hit $1,650 by the end of 2015."

This convinced small-time investors to buy in at $700 and we all know what happened. The stock price collapsed and some of these people lost money when they sold at a lower price. Some others who bought in at $700 are desperate to not lose on their investment so they want to see it top $700 again. This is to sell and minimize losses.

People overhype the stock and then when it drops, everybody points their disappointment at Tim Cook who had no part in the price changes.
post #108 of 113
Quote:
Originally Posted by Marvin View Post
If someone has 90% margins but net income of $100m, they aren't going to be valued more highly than Apple with ~20-25% net margins. It comes down to the amount of profit. Apple and Exxon are pretty even when it comes to profitability. Exxon's lower margins don't matter, it's how much the margins change. Both company's margins are staying pretty steady. I certainly don't see that Apple should be valued 30% higher than Exxon when their earnings don't reflect that.

Okay, you're starting to repeat yourself. When that happens, let's just assume we disagree and leave it at that, shall we?

 

The fact is, there is so much going on besides Net income and Gross Margins, that you can't make a conclusion about valuations. We're talking future cash flows, so we want to know about growth. While Apple and Exxon are pretty close when it comes to profits, Apple has been growing its profits dramatically, while Exxon has been mostly steady with the occasional bump in the road due to oil shocks, etc. Apple's valuation is higher even though the two NI are about the same, because the market presumes Apple's future profit growth will be better, even if it has slowed.

 

You keep saying that Apple's "earnings don't reflect that", which again is looking at the past earnings, but haven't we agreed that valuations are based upon future expectations? Seriously, what's your point, since you can't seem to stay consistent.

 

"If a small investor invested now, say $20k, they'd stand to gain $1705 minus fees etc if it reached the same peak as before. It's hardly a hot growth stock."

Who is saying Apple is a "hot growth stock"? Is this another straw man argument? I never said anything of the sort. In fact, given Apple's recent actions, it's more likely characterized as a value stock with growth potential. Why does your example presume that $700 is the top?

 

"The scam is overhyping potential gains in order to push investors into buying at a higher price:"

And again, why is this in response to me? Where did I hype anything? Everyone knows that theStreet is Jim Cramer's scam site. Why listen to anything written there? I've never linked to it, or quoted it.

 

"Some investors were getting too emotional, irresponsibly egged on by Wall Street analysts such as Brian White, who had a cutesy $1,111 price target, and Gene Munster, who couldn't stop talking out of his rear with empty Apple TV predictions."

And, again, what does this have to do with me and my posts? 

 

Good god man, I'm not going to calculate every fundamental metric for you, just go to Seekingalpha and read any number of posts about Apple. There's lots of fundamental and technical analysis. No need ro reinvent the wheel. Asking me that is starting to indicate you are just trying to irritate.

 

"I should have clarified that. I was of course suggesting the P/E was too high and you were saying it was too low"

Nonsense. Nowhere in that original comment, did I say it was "too low". I said, "Are you saying that the Price to Earnings is too high? Have you looked at any other companies lately?" Why do you just make up stuff?

 

"Basically, I'm saying that it's not significant if the P/E ratio is seen as too low because right now, Apple is a big company with little potential earnings growth."

I'm wondering if you understand the financial markets at all. IF, what you say is true that Apple's future earnings growth is slow, then the markets typically dictate that that company has a low PE ratio. It's NOT irrelevant. It's totally explainable, you just didn't do it. Why do utilities get low PE ratios? Because they have slow growth rates.

 

"Apple has dominated the premium industry so there's little room to grow further and this is not a bad thing."

Yes, but others may disagree and believe that Apple can extend its offerings, like they did with the iPod, from high-end products to the low-end. When Apple had no netbook offering, aka cheap laptop, Apple extended their line to include iPads, essentially lowering the price of entry for a computing product to $500, and with the iPad mini even lower. 

 

"There's a conflict here between Apple's core values and those of investors."

No, you are ascribing motivations to nameless investors. A total straw man argument.

 

"All I'm suggesting is that people don't get too carried away with the OMG stock split"

And, what does any of that have to do with my posts? If you want to write an opinion piece, do it in your own thread, and don't QUOTE my post, unless you are responding to me. Clearly, you aren't since none of this has anything to do with my original comment.

post #109 of 113
Quote:
Originally Posted by KenC View Post

While Apple and Exxon are pretty close when it comes to profits, Apple has been growing its profits dramatically

Apple's net income fell last year. The most recent quarters are flat vs last year. The smartphone and tablet markets are saturating.
Quote:
Originally Posted by KenC View Post

You keep saying that Apple's "earnings don't reflect that", which again is looking at the past earnings, but haven't we agreed that valuations are based upon future expectations?

You have to base the future assessment on something tangible otherwise you can make anything up and that's what people do all the time. Obviously you can't anticipate revolutionary products like the iPhone but even there, Apple's net income went from $1.9b in 2006 to $3.5b in 2007 then $4.8b in 2008. That's far from the recent $37b; it took a few years to reach this level of income.
Quote:
Originally Posted by KenC View Post

Good god man, I'm not going to calculate every fundamental metric for you, just go to Seekingalpha and read any number of posts about Apple. There's lots of fundamental and technical analysis. No need ro reinvent the wheel.

There's no calculation required, you must have some idea already of what Apple's stock price ought to be, otherwise you wouldn't assume it'll go up.
Quote:
Originally Posted by KenC View Post

Nowhere in that original comment, did I say it was "too low". I said, "Are you saying that the Price to Earnings is too high? Have you looked at any other companies lately?" Why do you just make up stuff?

Why ask the question if you agree it's not too low?
Quote:
Originally Posted by KenC View Post

IF, what you say is true that Apple's future earnings growth is slow, then the markets typically dictate that that company has a low PE ratio. It's NOT irrelevant. It's totally explainable, you just didn't do it. Why do utilities get low PE ratios? Because they have slow growth rates.

So what's the problem with Apple having a low P/E? Also it is irrelevant because as I explained, Amazon's P/E is vastly different from Apple's but their stock price growth over the past few years has been very similar. This means the P/E ratio is not a reliable indicator for what's going to happen with the stock price i.e irrelevant.
post #110 of 113
Quote:
Originally Posted by Marvin View Post

Quote:
Originally Posted by KenC View Post

While Apple and Exxon are pretty close when it comes to profits, Apple has been growing its profits dramatically

Apple's net income fell last year. The most recent quarters are flat vs last year. The smartphone and tablet markets are saturating.
Quote:
Originally Posted by KenC View Post

You keep saying that Apple's "earnings don't reflect that", which again is looking at the past earnings, but haven't we agreed that valuations are based upon future expectations?

You have to base the future assessment on something tangible otherwise you can make anything up and that's what people do all the time. Obviously you can't anticipate revolutionary products like the iPhone but even there, Apple's net income went from $1.9b in 2006 to $3.5b in 2007 then $4.8b in 2008. That's far from the recent $37b; it took a few years to reach this level of income.
Quote:
Originally Posted by KenC View Post

Good god man, I'm not going to calculate every fundamental metric for you, just go to Seekingalpha and read any number of posts about Apple. There's lots of fundamental and technical analysis. No need ro reinvent the wheel.

There's no calculation required, you must have some idea already of what Apple's stock price ought to be, otherwise you wouldn't assume it'll go up.
Quote:
Originally Posted by KenC View Post

Nowhere in that original comment, did I say it was "too low". I said, "Are you saying that the Price to Earnings is too high? Have you looked at any other companies lately?" Why do you just make up stuff?

Why ask the question if you agree it's not too low?
Quote:
Originally Posted by KenC View Post

IF, what you say is true that Apple's future earnings growth is slow, then the markets typically dictate that that company has a low PE ratio. It's NOT irrelevant. It's totally explainable, you just didn't do it. Why do utilities get low PE ratios? Because they have slow growth rates.

So what's the problem with Apple having a low P/E? Also it is irrelevant because as I explained, Amazon's P/E is vastly different from Apple's but their stock price growth over the past few years has been very similar. This means the P/E ratio is not a reliable indicator for what's going to happen with the stock price i.e irrelevant.

So that's why you think Apple is going down—because you think that the smartphone and tablet markets are becoming saturated. I don't think they are anywhere near to doing so. Just because the iPad market appears to have levelled off in recent months doesn't mean it will long-term. I think that both markets have plenty of room to grow. Apple's SKUs are so limited at the moment compared to the iPod.
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“I wasted time, and now doth time waste me.”
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post #111 of 113
The stock is seeing a nice bounce this morning, consistent with pre-split daily gains. Maybe we'll see $100 in a week?

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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post #112 of 113
Quote:
Originally Posted by Benjamin Frost View Post

So that's why you think Apple is going down—because you think that the smartphone and tablet markets are becoming saturated.

Apple isn't going down, Apple's just fine. Also not going up doesn't mean going down, I think they will remain fairly steady. The stock price, which is not directly linked to Apple's health can go down and there would still be nothing wrong with Apple.

They managed to sell 51m iPhones in Q1 2014 vs 47.8m in Q1 2013 and 26m iPads vs 22.9m but despite small unit volume growth, net profit was the same at $13.1b. If they managed to sell 55m iPhone 6 units, that would still be a great result but earnings might not grow, same as before.
Quote:
Originally Posted by Benjamin Frost View Post

I think that both markets have plenty of room to grow. Apple's SKUs are so limited at the moment compared to the iPod.

They can grow unit volume easily if they drop the price but it lowers margins and net income doesn't grow. People buy products at price points they are comfortable with and not everyone is willing to buy a $650 phone or get tied into the corresponding contract when there are cheaper alternatives. The premium markets will always have a more limited potential unit volume. The iPhone 6 might expand it but 50m units in 3 months is already huge.
post #113 of 113
I wonder if Apple has thought about using Beats to extend a line of covers and cases for iPhone, iPad and iPod touch? Where Apple can't and won't go in terms of style, Beats could easily experiment.

Oh, and in case Mel Gross hasn't been looking... 1tongue.gif ... AAPL is up the pre-split equivalent of about $11.34 per share as of this moment. What's more strange is that BBRY (Blackberry) is up more than 3%!

UPDATE: The stock closed today at $93.72. Not a bad first day after the split!
Edited by SpamSandwich - 6/9/14 at 1:10pm

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

Reply
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