radarthekat

ksec said:

rogifan_new said:

Stock is down almost 5% today. Everyone long on Apple why do you think Wall Street sentiment on the company is going to change? Services revenues are up, other revenues from accessories are up. iPhone ASP is the highest it’s ever been and yet the stock is down nearly 5%. What is going to ever make them bullish on Apple?

Possibly Never.

I am not sure how I could possibly better explain this and get the point across. People has been pointing fingers and calling me bull shit.

You must separate yourself from an Apple Fan boy ( like AI is ) to actual investing and sentiment, or there is a combined word for it, the "market".

Before anything else, Apple is doing great, flipping great. There is no other way to put it. But, when people say Apple is doomed, some actually mean Apple "is" doomed, like hard core Android fans, some actually means Apple is not doing as well as they expected. Or According to AI those has reading comprehension problems.

Let's define what super cycle is, and also referred a few times in Bloomberg and other financial media. They were expecting a iPhone 6 Plus cycle, where everyone was rushing to buy it, and it was by and large the majority of iPhone sold during its initial launch, mostly helped by China.  The iPhone 6 Plus cycle, sold 135M Unit combined  in Q1 and Q2, staggering number.

Wall Street / Market kind of expect / want this to happen, people will rush to buy iPhone X, more new user to iPhone ecosystem, more users upgrade, and it will be the sold in vast majority of it, bringing up ASP and Unit Sales.

Remember this is iPhone X here, not iPhone 8 or else.

This is high expectation, or ridiculous in numbers. So from that point of view, iPhone X failed. So when Nikkei posted news about 40M unit in Q1 and 20M in Q2, it wasn't that bad at all. Yes AI and other dont like the word production cut in half, which is likely true in seasonal sales. Market was secretly expecting Apple to even beat the 80M unit number, and wanting like 50M+ iPhone X.   

So while iPhone X did not create a super cycle, it was Ok when the results came along. iPhone X is leading iPhone sold every week, ASP is nearly $800. And one reason why Ming from KGI is already hyping the super cycle is still to come next year when Apple has even more new iPhone next year.

Problem is all these expectation is already priced in*, one reason why Apple is trading at P/E 17x now instead of its usual 15 in the past three to four years.

(*Actually that is not entirely true, Berkshire Hathaway buying was the main causes of (slight ) spike, lots of traders, even on twitter was seeing / guessing someone buying lots of AAPL stocks, and it later became clear it was Berkshire Hathaway )

So why is AAPL so undervalued, even at a P/E 17 is very low, compared to the current S&P average of 26, or Tech stocks from Google and the like of close or above 30.

Investor generally view Facebook, Microsoft, Amazon and Google as monopoly. And that is very much true.

Social Network? If you view the world Top 6 social and instant messenger network, five of them are from Facebook, one is WeChat.

Microsoft? The world is still running on Excel. Business is still on Windows, growing lock in ( Actually it is not but that is how they view it ) in Azure , Services and Office.  

Google? Android and Search ( Ads ) Literally Zero direct competition. 

Amazon? You want to place your bet against Jeff Bezos?

Apple? Apple doesn't have a monopoly. Or it does, it is called customer loyalty. But it is hard to quantify loyalty, or not quantify it, but price or value it. It is much easier for investor to understand Microsoft and Facebook lock in, especially when both dont have its competitor in its field. iOS has Android, macOS has Windows. Apple Music has spotify etc. Each and every major Apple product or services has a major market share competitor.

There is also, always the fear that the current pricing of iPhone and Unit sold, with its margin is not sustainable. I have seen this asked a few times already, and there is yet an answer. No other company in the history of man kind has created a product that is as widely popular as the iPhone, at such a price range, being used now and still growing slightly, and has such a NET margin. None. Zero. ( The closest thing is oil from Saudi where cost is zero and they keep bumping. )

So it may be forgiveable one does not know how to value such company that man kind never seen before.

You asked: What? AAPL is down not because of its report, but Wall Street as a whole is looking for safety from raising interest rate.

Well yes, and that Safety was established long ago, AAPL at around P/E 15.
   

randominternetperson said:

Weird how October+November+December 2017 (31+30+31 days) is somehow a week less than those same three months of 2016.

(Presumably it's because they "close the books" on sales at the end of every week rather than daily, but still.)

So a smart investor wants that cash removed from the books, which would either reduce the market cap of the company or, if the cash isn't being valued at even 1x its value, which could be argued is the case with Apple, removing that cash would leave the market cap where it is, which would then imply a higher earnings multiple against the productive operating side of the business, while also taking shares off the market, which would increase earnings per share going forward.

And a higher earnings multiple means that as earnings grow in the future, the stock will climb faster.  Carl Icahn might have had all of these effects in mind - more efficient allocation of investor's dollars, increase in earnings multiple against operating business, and reduction in shares netting an increase in earnings per remaining share - when he approached Tim Cook years ago.  Pity we didn’t have tax reform at that time, when the share price was significantly lower.