Anecdotally I've heard and read many saying as soon as it hit 100 they'd sell, especially those that had just bought in, and got caught by not selling, when AAPL went over 700 last time. The fact 100 didn't trigger a sell off was a relief to me.
The last major selloff happened because of several factors. We can't consider a few percentage points as a selloff. Not really. The market wanders up and down. Normal stuff. It was over 99 recently, then dropped to the high 94's. Some was market fears of Ukraine, and another was the Gaza conflict, and the rest was the Ebola scare.
But the selloff from 700 was due, in the beginning, to investment firms selling some of their fully loaded Apple portfolio by the end of the year for tax purposes, as it had gone up so much. Then that resulted in a broader market drop as the stock slid because of the institutional selloff earlier. That, combined with lower Apple margins and net, continued the slide. Fear generates fear, and the stock continued to slide.
The situation is different now. Institutions are building up their Apple portfolios slowly, and aren't near being fully loaded. Apple is looking good, and a couple of forward looking quarter's are ahead. I doubt we'll see that selloff at the end of this year.
Although Apple reached a record share price on Tuesday, the company remains well behind its highest-ever market capitalization of over $665 billion. As of Tuesday, Apple's market cap was valued at just over $602 billion.
thats because apple retired the shares it bought back. less shares to multiple against the stock price.
Originally Posted by digitalclips
Not my area ... but shouldn't there be some sort of formula that corrects for that, else how can you ever compare different companies let alone situations like this?
In a rational world, the value of a company wouldn't depend on how much stock there is: it would depend just on how well it's doing in the marketplace! In that "rational world", if there's less stock the same value is divided up among fewer people: each owns more! That's why they say that a share buyback (which retires the shares bought) returns capital to the shareholders. If we pretend the world is rational, the formula you're looking for is
(comparable peak price) = (peak value of company) / (number of shares now)
As of the end of June, AAPL had 5.989 billion shares outstanding. For the company value (market cap) to again reach its peak of $658.15 billion from two years ago, the price per share would have to be about $110. That's the "comparable peak price" that we need to beat.
Seriously, though, the funny thing is I think I'm more interested intellectually and from a problem-analysis-solution perspective than I am interested in actually buying either an iPhone 6 or an iWatch (although I'm sure I'll eventually end up doing one or both). I just love to see the product of all that hard work and careful thought. It's somehow intrinsically rewarding to see people striving for great things.
The last major selloff happened because of several factors. We can't consider a few percentage points as a selloff. Not really. The market wanders up and down. Normal stuff. It was over 99 recently, then dropped to the high 94's. Some was market fears of Ukraine, and another was the Gaza conflict, and the rest was the Ebola scare.
But the selloff from 700 was due, in the beginning, to investment firms selling some of their fully loaded Apple portfolio by the end of the year for tax purposes, as it had gone up so much. Then that resulted in a broader market drop as the stock slid because of the institutional selloff earlier. That, combined with lower Apple margins and net, continued the slide. Fear generates fear, and the stock continued to slide.
The situation is different now. Institutions are building up their Apple portfolios slowly, and aren't near being fully loaded. Apple is looking good, and a couple of forward looking quarter's are ahead. I doubt we'll see that selloff at the end of this year.
Good to know. I am holding for the long run. Heck I get great interest on my money in AAPL even if it never goes up.
In a rational world, the value of a company wouldn't depend on how much stock there is: it would depend just on how well it's doing in the marketplace! In that "rational world", <span style="line-height:1.4em;">if there's less stock the same value is divided up among fewer people: each owns more! </span>
<span style="line-height:1.4em;">That's why they say that a share buyback (which retires the shares bought) returns capital to the shareholders. If we pretend the world is rational, the formula you're looking for is </span>
(comparable peak price) = (peak value of company) / (number of shares now)
As of the end of June, AAPL had 5.989 billion shares outstanding. For the company value (market cap) to again reach its peak of $658.15 billion from two years ago, the price per share would have to be about $110. That's the "comparable peak price" that we need to beat.
Thanks, that's interesting. My reason for buying a lot of AAPL way back when was simply faith in the company after Steve's return, not anything to do with numbers. So far so good
Although Apple reached a record share price on Tuesday, the company remains well behind its highest-ever market capitalization of over $665 billion. As of Tuesday, Apple's market cap was valued at just over $602 billion.
thats because apple retired the shares it bought back. less shares to multiple against the stock price.
Not my area ... but shouldn't there be some sort of formula that corrects for that, else how can you ever compare different companies let alone situations like this?
It only makes sense to compare share price changes (i.e., returns) over time, not changes in market cap. (If we can argue that two shares are risk-equivalent, we can compare a multiple such as the PE ratio; but that can be questionable in many instances). The market cap is, to some extent, irrelevant to the individual shareholder since all that matters is the number of shares (s)he owns multiplied by the share price. The market cap will automatically decrease -- all else equal -- when cash leaves the company via dividends and share repurchases.
At the all time high capitalization price of 665 and taking into account Apple's share repurchase the split adjusted price was $110. We still have room to go to reach that record.
This is irrelevant unless you sold shares back to Apple from your holding in proportion to the amount that Apple repurchased.
Although Apple reached a record share price on Tuesday, the company remains well behind its highest-ever market capitalization of over $665 billion. As of Tuesday, Apple's market cap was valued at just over $602 billion.
thats because apple retired the shares it bought back. less shares to multiple against the stock price.
Finally the analysts are catching on to what I've been saying all along. A new closing high in the share price, yes, but not a new high in the company's valuation. When Apple closed at $702.10 on Sept 19, 2012, the market had valued the company at about $665 billion, considering the 945 million shares outstanding at the time. With all the shares bought back since, the market would have to assign a share price of about $110 to assign Apple the same overall valuation of $665 billion it assigned it two years ago. I fully expect the market to do just that in the weeks to come.
It only makes sense to compare share price changes (i.e., returns) over time, not changes in market cap. (If we can argue that two shares are risk-equivalent, we can compare a multiple such as the PE ratio; but that can be questionable in many instances). The market cap is, to some extent, irrelevant to the individual shareholder since all that matters is the number of shares (s)he owns multiplied by the share price. The market cap will automatically decrease -- all else equal -- when cash leaves the company via dividends and share repurchases.
(Added stuff).
Of course, with all the talk about what makes a share worth what it is, ultimately, share prices are irrational. So we look at the average P/E in the industry, and it think it's about 17.5. Apple's is lower, so it could lead to a higher share price to meet that average. But what does that average really mean? Well, not much. In reality, it's just a feeling that P/E should be priced at where it is.
And how does one account for Amazon, with it's 830 P/E. Surely, irrational exuberance.
Of course, with all the talk about what makes a share worth what it is, ultimately, share prices are irrational. So we look at the average P/E in the industry, and it think it's about 17.5. Apple's is lower, so it could lead to a higher share price to meet that average. But what does that average really mean? Well, not much. In reality, it's just a feeling that P/E should be priced at where it is.
And how does one account for Amazon, with it's 830 P/E. Surely, irrational exuberance.
Amazon is, indeed, ridiculously valued. When there are thousands of stocks traded, there are always outliers here as anywhere else (Tesla is another one, IMHO).
A few examples like that do not necessarily extrapolate to irrationality in relation to the market as a whole, or to relatively more mature businesses.
It only makes sense to compare share price changes (i.e., returns) over time, not changes in market cap. (If we can argue that two shares are risk-equivalent, we can compare a multiple such as the PE ratio; but that can be questionable in many instances). The market cap is, to some extent, irrelevant to the individual shareholder since all that matters is the number of shares (s)he owns multiplied by the share price. The market cap will automatically decrease -- all else equal -- when cash leaves the company via dividends and share repurchases.
Defining relative market cap is relevant to the individual shareholder as an indication of equivalency when large numbers of shares are being bought back. Saying AAPL hit "a new all-time high" without clarifying what you're talking about is disingenuous at best.
That said, I agree that market cap is a worthless indicator of value. That doesn't stop people from using it to attack the stock, though - "Law of Large Numbers" and all that rot.
Amazon is, indeed, ridiculously valued. When there are thousands of stocks traded, there are always outliers here as anywhere else (Tesla is another one, IMHO).
A few examples like that do not necessarily extrapolate to irrationality in relation to the market as a whole, or to relatively more mature businesses.
Absolutely. Have you seen the new multi-passenger rocket passenger cabin for future space travel? SpaceX is the most forward-looking space company today, IMO. I would get in on the ground floor of their IPO.
Not my area ... but shouldn't there be some sort of formula that corrects for that, else how can you ever compare different companies let alone situations like this?
No formula needed. In theory, when Apple purchased back it shares, the price of each outstanding shares goes up in value, to make up for less outstanding shares. It's already built into the price of the stock. I remember AAPL going up after Apple announced their buyback plan and then it going up again when they announced how much they already bought back. The buy back also added a few pennies to Apple numbers with their earning per shares, when they announced last quarter earnings. Which might have helped AAPL in going up the next day. Instead of going down, which is what usually happens after Apple earnings. But buying back shares is not the only factor that moves a stock. How much of this $100+ of AAPL share is due to the buy back is anyones guess. But if it weren't for the buy back, AAPL mostly wouldn't be at $100+ today. But that's not to say that it wouldn't be close to $100 or wouldn't be $100+ next week or maybe hit it last week.
The market cap of a publicly traded company is what it is .......... the value of a share X the number of outstanding shares. There is no compensating, because there's less shares today than in the past, because it's already part of the share price today.
No formula needed. In theory, when Apple purchased back it shares, the price of each outstanding shares goes up in value, to make up for less outstanding shares.
Not really. I mean yes, the price of each share might go up, but that's the market just being the market and reacting with expectation and re-evaluation on every action. It doesn't have a direct relationship though, since the value of the company is decreasing because it using cash (or debt) to buy back those shares. The overall value of a company will include all of its cash and debt, so when cash goes down (or debt goes up), value goes down.
If you want to compare Apple's position then with now in terms of market cap, you could add Apple's total expenditure on the share buyback to today's market cap.
Comments
The last major selloff happened because of several factors. We can't consider a few percentage points as a selloff. Not really. The market wanders up and down. Normal stuff. It was over 99 recently, then dropped to the high 94's. Some was market fears of Ukraine, and another was the Gaza conflict, and the rest was the Ebola scare.
But the selloff from 700 was due, in the beginning, to investment firms selling some of their fully loaded Apple portfolio by the end of the year for tax purposes, as it had gone up so much. Then that resulted in a broader market drop as the stock slid because of the institutional selloff earlier. That, combined with lower Apple margins and net, continued the slide. Fear generates fear, and the stock continued to slide.
The situation is different now. Institutions are building up their Apple portfolios slowly, and aren't near being fully loaded. Apple is looking good, and a couple of forward looking quarter's are ahead. I doubt we'll see that selloff at the end of this year.
I LOVE it when the winners, win.
I side with the winning team, always. Never the losers. Therefore an Apple stock price of $100 means I want MORE apple products!
Next year when the stock price is $300 I'll even want MORE!
Because I judge a product on the companies stock price.
And did I mention that Samsung copied apples 4.7" screen? Because they did.
Now where's Constable Odo when you need him?
I predicted this 31 hours ago.
http://forums.appleinsider.com/t/181862/apple-unlikely-to-sell-sapphire-iphones-this-year-is-setting-the-stage-for-future-models-jp-morgan#post_2580717
Although Apple reached a record share price on Tuesday, the company remains well behind its highest-ever market capitalization of over $665 billion. As of Tuesday, Apple's market cap was valued at just over $602 billion.
thats because apple retired the shares it bought back. less shares to multiple against the stock price.
Not my area ... but shouldn't there be some sort of formula that corrects for that, else how can you ever compare different companies let alone situations like this?
In a rational world, the value of a company wouldn't depend on how much stock there is: it would depend just on how well it's doing in the marketplace! In that "rational world", if there's less stock the same value is divided up among fewer people: each owns more! That's why they say that a share buyback (which retires the shares bought) returns capital to the shareholders. If we pretend the world is rational, the formula you're looking for is
(comparable peak price) = (peak value of company) / (number of shares now)
As of the end of June, AAPL had 5.989 billion shares outstanding. For the company value (market cap) to again reach its peak of $658.15 billion from two years ago, the price per share would have to be about $110. That's the "comparable peak price" that we need to beat.
Yawn. Doooomed (tm). meh.
Seriously, though, the funny thing is I think I'm more interested intellectually and from a problem-analysis-solution perspective than I am interested in actually buying either an iPhone 6 or an iWatch (although I'm sure I'll eventually end up doing one or both). I just love to see the product of all that hard work and careful thought. It's somehow intrinsically rewarding to see people striving for great things.
Good to know. I am holding for the long run. Heck I get great interest on my money in AAPL even if it never goes up.
Thanks, that's interesting. My reason for buying a lot of AAPL way back when was simply faith in the company after Steve's return, not anything to do with numbers. So far so good
Although Apple reached a record share price on Tuesday, the company remains well behind its highest-ever market capitalization of over $665 billion. As of Tuesday, Apple's market cap was valued at just over $602 billion.
thats because apple retired the shares it bought back. less shares to multiple against the stock price.
Not my area ... but shouldn't there be some sort of formula that corrects for that, else how can you ever compare different companies let alone situations like this?
It only makes sense to compare share price changes (i.e., returns) over time, not changes in market cap. (If we can argue that two shares are risk-equivalent, we can compare a multiple such as the PE ratio; but that can be questionable in many instances). The market cap is, to some extent, irrelevant to the individual shareholder since all that matters is the number of shares (s)he owns multiplied by the share price. The market cap will automatically decrease -- all else equal -- when cash leaves the company via dividends and share repurchases.
(Added stuff).
At the all time high capitalization price of 665 and taking into account Apple's share repurchase the split adjusted price was $110. We still have room to go to reach that record.
This is irrelevant unless you sold shares back to Apple from your holding in proportion to the amount that Apple repurchased.
Although Apple reached a record share price on Tuesday, the company remains well behind its highest-ever market capitalization of over $665 billion. As of Tuesday, Apple's market cap was valued at just over $602 billion.
thats because apple retired the shares it bought back. less shares to multiple against the stock price.
Finally the analysts are catching on to what I've been saying all along. A new closing high in the share price, yes, but not a new high in the company's valuation. When Apple closed at $702.10 on Sept 19, 2012, the market had valued the company at about $665 billion, considering the 945 million shares outstanding at the time. With all the shares bought back since, the market would have to assign a share price of about $110 to assign Apple the same overall valuation of $665 billion it assigned it two years ago. I fully expect the market to do just that in the weeks to come.
http://fortune.com/2014/06/08/apple-splits-7-to-1/
Please stop posting (and linking to) nonsense.
Strange comments.
Do you ever invest? If so, do you have joy when you investments go down? Yes? Well, then that is strange.
Yes, well, several analysts have been saying this for awhile now.
And how does one account for Amazon, with it's 830 P/E. Surely, irrational exuberance.
Of course, with all the talk about what makes a share worth what it is, ultimately, share prices are irrational. So we look at the average P/E in the industry, and it think it's about 17.5. Apple's is lower, so it could lead to a higher share price to meet that average. But what does that average really mean? Well, not much. In reality, it's just a feeling that P/E should be priced at where it is.
And how does one account for Amazon, with it's 830 P/E. Surely, irrational exuberance.
Amazon is, indeed, ridiculously valued. When there are thousands of stocks traded, there are always outliers here as anywhere else (Tesla is another one, IMHO).
A few examples like that do not necessarily extrapolate to irrationality in relation to the market as a whole, or to relatively more mature businesses.
Defining relative market cap is relevant to the individual shareholder as an indication of equivalency when large numbers of shares are being bought back. Saying AAPL hit "a new all-time high" without clarifying what you're talking about is disingenuous at best.
That said, I agree that market cap is a worthless indicator of value. That doesn't stop people from using it to attack the stock, though - "Law of Large Numbers" and all that rot.
I keep waiting SpaceX to go public.
Absolutely. Have you seen the new multi-passenger rocket passenger cabin for future space travel? SpaceX is the most forward-looking space company today, IMO. I would get in on the ground floor of their IPO.
Not my area ... but shouldn't there be some sort of formula that corrects for that, else how can you ever compare different companies let alone situations like this?
No formula needed. In theory, when Apple purchased back it shares, the price of each outstanding shares goes up in value, to make up for less outstanding shares. It's already built into the price of the stock. I remember AAPL going up after Apple announced their buyback plan and then it going up again when they announced how much they already bought back. The buy back also added a few pennies to Apple numbers with their earning per shares, when they announced last quarter earnings. Which might have helped AAPL in going up the next day. Instead of going down, which is what usually happens after Apple earnings. But buying back shares is not the only factor that moves a stock. How much of this $100+ of AAPL share is due to the buy back is anyones guess. But if it weren't for the buy back, AAPL mostly wouldn't be at $100+ today. But that's not to say that it wouldn't be close to $100 or wouldn't be $100+ next week or maybe hit it last week.
The market cap of a publicly traded company is what it is .......... the value of a share X the number of outstanding shares. There is no compensating, because there's less shares today than in the past, because it's already part of the share price today.
No formula needed. In theory, when Apple purchased back it shares, the price of each outstanding shares goes up in value, to make up for less outstanding shares.
Not really. I mean yes, the price of each share might go up, but that's the market just being the market and reacting with expectation and re-evaluation on every action. It doesn't have a direct relationship though, since the value of the company is decreasing because it using cash (or debt) to buy back those shares. The overall value of a company will include all of its cash and debt, so when cash goes down (or debt goes up), value goes down.
If you want to compare Apple's position then with now in terms of market cap, you could add Apple's total expenditure on the share buyback to today's market cap.