sacto joe

Good article, DED. The point about Apple’s huge investment in creating products of the highest quality and the impact of that quality emphasis on its lower cost products was completely ignored by the usual slate of naysayers, but is absolutely central to Apple’s long term advantage.

gmgravytrain said:

Let's see how long AAPL is able to hold its value before selling off again.  Apple has too many gutless shareholders who quickly dump their stock over any unconfirmed negative rumors.  Apple has shareholders who have little confidence in Apple or Tim Cook.  Look at how solid MSFT stock is at $1T+.  There is very little chance of MSFT stock shedding $450B of value as Apple did.  Wall Street loves THE CLOUD and any company that has such a business.  Apple should have acquired a cloud business instead of just buying back shares.  Apple needs a business Wall Street considers an unlimited growth business.  Apple mainly depending upon iPhone sales for consistent revenue is too risky and Wall Street knows the smartphone business is a zero-growth market, at best.  Look at Microsoft's high P/E (26) compared to Apple's P/E (19).  Apple's P/E definitely shows a lack of big investor confidence.  Apple carries the lowest P/E of all major tech companies and much lower compared to any of the FANG companies.

From about 2003 to about 2011, the price of MSFT barely moved the needle. Since then, it’s gone up dramatically, but lately it’s gotten stuck again at about the $1 T mark.

The bottom line is there is NO PREDICTING any stock valuation over the long term. And today’s market is more of a casino than most times in the past. Is MSFT a momentum stock? Maybe. If so, it can quickly move in either direction.

AAPL, OTOH, is clearly not a momentum stock. It’s literally earned at a minimum it’s present Price/Earnings (per share) ratio. Indeed, but for the Trump Tariff War, AAPL would be far above even it’s present price. And someday that War will end.

randominternetperson said:

sacto joe said:

lkrupp said:

Mike Wuerthele said:

lkrupp said:

No doubt this article will soon be “corrected” by the financial “experts” who live here. BTW, Apple’s own Stocks app shows the current market cap to be $983B even with the stock being up $5.74 right now. So where’d AI get this $1T figure from?

Apple's stock app doesn't appear to be using the correct shares outstanding figure.

Seconds ago:

Well, then we have a problem here as Yahoo’s stock ticker also lists AAPL as $985B. MarketWatch says $1T, others agree with Yahoo and still others agree with MarketWatch  or $1.007T. I guess it will take a few days for the true story to resolve itself.

The reality is that share count for Apple is a moving target. From their last Form 10Q, page 2:

“4,519,180,000 shares of common stock were issued and outstanding as of July 19, 2019.”

Clearly, they have LESS shares outstanding than this now, but using that figure, to get to a $1 T market capitalization, they’d have to have a stock price of (1T/4.519180M=) $221.28/share.

So by that measure, Apple is indeed in the Trillion Dollar Club again.

Addendum: The less shares Apple has outstanding, the higher the cost per share has to be to reach the 1 T mark. That’s where”valuation” gets interesting. Is Apple only as truly “valuable” as it was a year ago? I would argue that it’s decidedly more valuable....

Addendum #2: The issue of value is very much in the eyes of the beholder. I’d argue that net cash is “dead value” to most of the market (hence the sky-high valuations for companies like Amazon, Netfix, etcetera). Value is more placed on growth potential, IMHO. By that measure, Apple is clearly still growing handily (years after that was supposed to be impossible), and stock buybacks, which convert “dead” cash into an increased percentage ownership for remaining shares, are thus seen as a legitimate means of increasing stock value for a still-growing company (by increasing earnings and revenue per share).

Strictly speaking, calculating market value based on current share price is nonsense.

The current market price just indicates the current equilibrium between the buyers who are willing to pay the most and the shareholders willing to sell for the least.  There are millions of AAPL shareholders (and hundreds of major institutional investors who own the bulk of AAPL stock).  Only a few of them are willing to sell their shares for the current price (which is why it's the current price).  Everyone else values their AAPL shares higher.  Therefore if the current market cap for Apple were exactly $1 trillion, even if you had a trillion dollars in cash and could somehow contact every holder of AAPL shares simultaneously, the vast majority of those potential sellers would tell you to buzz off.  Therefore, logically Apple is valued by the market at well over a [trillion] dollars.  (Obviously this isn't unique to Apple; it's just an observation about what "market cap" means--and doesn't mean).

If you’d said “valuation” rather than “market [valuation]”, I would have agreed with you. But the market’s valuation/capitalization, while also a moving target like Apple’s share count, is literally defined by price per share times share count.

It helps to keep our terms clear. And note that nothing says that market cap equals a meaningful estimate of a company’s value, either at a specific moment or as a potential.

Which, as a long term AAPL owner, has been my beef with the market. Since the Great Recession, the market has drastically underestimated both Apple’s potential for continued growth and the value of it’s cash flow. It’s less the case now, but it took better than a decade to see that begin. And that’s one part of why Apple buying back huge amounts of AAPL at fire sale prices was both a no-brainer and a genius move.

Hi.Jack said:

Nice. If I disable all the forced and automated subscription services my kids are sucked into, Apple will be a Billion dollar company again.

Don’t let the door hit you in the butt on the way out....

lkrupp said:

Mike Wuerthele said:

lkrupp said:

No doubt this article will soon be “corrected” by the financial “experts” who live here. BTW, Apple’s own Stocks app shows the current market cap to be $983B even with the stock being up $5.74 right now. So where’d AI get this $1T figure from?

Apple's stock app doesn't appear to be using the correct shares outstanding figure.

Seconds ago:

Well, then we have a problem here as Yahoo’s stock ticker also lists AAPL as $985B. MarketWatch says $1T, others agree with Yahoo and still others agree with MarketWatch  or $1.007T. I guess it will take a few days for the true story to resolve itself.

The reality is that share count for Apple is a moving target. From their last Form 10Q, page 2:

“4,519,180,000 shares of common stock were issued and outstanding as of July 19, 2019.”

Clearly, they have LESS shares outstanding than this now, but using that figure, to get to a $1 T market capitalization, they’d have to have a stock price of (1T/4.519180M=) $221.28/share.

So by that measure, Apple is indeed in the Trillion Dollar Club again.

Addendum: The less shares Apple has outstanding, the higher the cost per share has to be to reach the 1 T mark. That’s where”valuation” gets interesting. Is Apple only as truly “valuable” as it was a year ago? I would argue that it’s decidedly more valuable....

Addendum #2: The issue of value is very much in the eyes of the beholder. I’d argue that net cash is “dead value” to most of the market (hence the sky-high valuations for companies like Amazon, Netfix, etcetera). Value is more placed on growth potential, IMHO. By that measure, Apple is clearly still growing handily (years after that was supposed to be impossible), and stock buybacks, which convert “dead” cash into an increased percentage ownership for remaining shares, are thus seen as a legitimate means of increasing stock value for a still-growing company (by increasing earnings and revenue per share).