Apple Becomes Most Valuable Publicly-Traded Stock Ever

[BC2009]

One big bubble ready to burst.

An iBubble.

Right.... because the valuation of AAPL is completely based on speculation rather than revenue, earnings and assets. "Bubbles" are defined as

trade in high volumes at prices that are considerably at variance with intrinsic values

(see Wikipedia for multiple references on that definition).

If anything, AAPL has been the anti-bubble for years now. The P/E ratio of speculative stocks like Amazon (AMZN) is over 290. The P/E ratio for AAPL has been hovering at 14 to 16 all year (currently 15.6). The P/E ratio is even lower for AAPL if you calculate the forward P/E (i.e.: price to earnings using this year's earnings). It gets even more insane if you look at the fact that Apple has one fifth of the market capitalization in no-risk cash or cash-equivalent assets and the company has zero debt. If you subtract the cash assets from the market cap and then recalculate the P/E it falls well below 10. For reference, Google's (GOOG) P/E ratio is 20 and Microsoft's (MSFT) is about 15.4. So investors are being more speculative on GOOG and just as speculative on MSFT, despite AAPL outperforming both companies consistently quarter after quarter.

If you want an example of a "bubble", then look at Amazon (AMZN). With their 290+ P/E ratio, investors would have to see Amazon garner near 100% of all retailing (not just online retailing) in the next 10 years without drawing government regulation because of monopoly power on price controls. AMZN is the the definition of a "bubble" stock. There are no fundamental "intrinsic values" to support Amazon's stock price -- it is 100% speculation that something about Amazon's formula will one day yield Apple-like profit. On the other hand, Apple is doing "Apple-like" profit today with potential to grow in the markets they profit in considering their current share of the market and their opening up to new geographies internationally.

There's a little education in economics for you. Bubbles are about things being artificially inflated due to speculation driving demand. Nothing about AAPL stock price is speculative. If the company maintained its anemic P/E ratio and just kept increasing revenue on their current (or half their current) trajectory the stock price would break $1000 in the next 12 months.

 

[mdelvecchio]

One big bubble ready to burst.

yep, youve been saying that for over a decade now. any minute now.

or, they could just be a really productive company w/ a solid stock price, that even if it goes down, should be a good investment for years to come.

 

[Chupa Chupa]

Yep! Aint that the truth. We're still riding high from Steve's success. Tim Cook is running this ship like the Titanic, though, and we won't see the results of his disaster for a few years.

Kind of an ill-fitting analogy. I think you mean Tim Cook is running Apple like Captain Smith. It was Capt. Smith's negligence that caused the Titanic to run into the iceberg. Also the Titanic sunk in a matter of hours, yet you end your comment that we won't see Cook's results for years, which again doesn't really fit with the Titanic analogy.

But getting away from analogies, what evidence do you have that Cook is ruining Apple's future profitability? We've seen a few missteps such as the EPEAT and Apple Store employee walk backs, but hardly anything of significance.

 

[scotty321]

Okay, let's just see what happens with Tim Cook for a few years before we make any big speculations about the future. I'm highly skeptical of Tim Cook's abilities, but only time will tell. I'd love to be proven wrong, but just based solely on his hiring decisions so far (not counting any of his other blunders), I'm just not convinced about Tim at this point.

 

[lkrupp]

One big bubble ready to burst.

Only in your Apple hating wet dreams. You went Android but you're still here. Still gotta have your Apple fix?

 

[mdelvecchio]

Oh, please. Tim has shown NO KNACK for innovation at all. ... The meetings at Apple these days don't even involve designers & engineers anymore... they're run by "operations efficiency" people. Tim doesn't understand "products" or "innovations".

so what product department do you work in? because to claim you know how the meetings are run, you must work there, right?

otherwise i think youre referring to the story published here when an anon source said there are logistics people involved in the meetings alongside engineering & design... which is nowhere near the same as what youve stated. (w/ product launches the massive size they are now, it seems prudent to include logistics in meetings so they can begin to plan & source as early as possible)

so do tell.

 

[Twixt]

Great that it goes up again and again, fall will be even better

 

[LagunaSol]

One big bubble ready to burst.

^^ iEnvy ^^

 

[Navdakilla]

"I wish I could have bought stocks years ago" - everyone

That's easier said that done.


Also this is a news story like every couple of weeks. We get it.

 

[Rogifan]

Oh, please. Tim has shown NO KNACK for innovation at all. The only thing the man has done is hire the failure known as John Browett (who is already destroying Apple's retail operations), along with another failure from United Airlines (the guy who drove United Airlines into bankruptcy). Every product that has come out so far was a product that Steve was still overseeing. Every single top level executive under Steve has now left Apple except for Scott Forstall & Jony Ives, and they're probably next to go. The meetings at Apple these days don't even involve designers & engineers anymore... they're run by "operations efficiency" people. Tim doesn't understand "products" or "innovations". Plus, have you even seen the terrible advertisements coming out of Apple these days? I'm not just talking about the "Genius" ads, I'm talking about the creepy celebrity Siri ads and the boring Retina MacBook Pro ads. Those are Phil Schiller's blunders that Tim Cook did NOT keep in check like Steve would have. If you think Tim is going to continue riding Apple high into the future, then I have a bridge to sell you.

Not sure what you're talking about. Every executive, with the exception of John Browett and their legal guy has been at Apple for 13+ years. Eddy Cue and Jony Ive pre-date Steve's return to Apple. Phil Schiller came back when Steve did. Obviously Scott Forstall came over from NeXT. Tim Cook was hired shortly after Steve came back. The executive team are not a bunch of noobs and they all worked closely with Steve.

 

[DotCom2]

S-.. sSssss... Ssssell. Sell... I dunno.

I'm getting nervous that this might be a bubble. I got in around $320, with a few additional buy-ins along the way. How long can this really keep up? It feels like a bubble.

I'd be pissed off if I sold it all, only for it to get to $700, then $800.... I guess that's the nature of investing though.

Then sell half and keep the rest as your play money.

 

[Rogifan]

Kind of an ill-fitting analogy. I think you mean Tim Cook is running Apple like Captain Smith. It was Capt. Smith's negligence that caused the Titanic to run into the iceberg. Also the Titanic sunk in a matter of hours, yet you end your comment that we won't see Cook's results for years, which again doesn't really fit with the Titanic analogy.

But getting away from analogies, what evidence do you have that Cook is ruining Apple's future profitability? We've seen a few missteps such as the EPEAT and Apple Store employee walk backs, but hardly anything of significance.

I guess people have forgotten it was the deity Steve himself who recommended Tim replace him as CEO?

 

[Rogifan]

Right.... because the valuation of AAPL is completely based on speculation rather than revenue, earnings and assets. "Bubbles" are defined as



(see Wikipedia for multiple references on that definition).

If anything, AAPL has been the anti-bubble for years now. The P/E ratio of speculative stocks like Amazon (AMZN) is over 290. The P/E ratio for AAPL has been hovering at 14 to 16 all year (currently 15.6). The P/E ratio is even lower for AAPL if you calculate the forward P/E (i.e.: price to earnings using this year's earnings). It gets even more insane if you look at the fact that Apple has one fifth of the market capitalization in no-risk cash or cash-equivalent assets and the company has zero debt. If you subtract the cash assets from the market cap and then recalculate the P/E it falls well below 10. For reference, Google's (GOOG) P/E ratio is 20 and Microsoft's (MSFT) is about 15.4. So investors are being more speculative on GOOG and just as speculative on MSFT, despite AAPL outperforming both companies consistently quarter after quarter.

If you want an example of a "bubble", then look at Amazon (AMZN). With their 290+ P/E ratio, investors would have to see Amazon garner near 100% of all retailing (not just online retailing) in the next 10 years without drawing government regulation because of monopoly power on price controls. AMZN is the the definition of a "bubble" stock. There are no fundamental "intrinsic values" to support Amazon's stock price -- it is 100% speculation that something about Amazon's formula will one day yield Apple-like profit. On the other hand, Apple is doing "Apple-like" profit today with potential to grow in the markets they profit in considering their current share of the market and their opening up to new geographies internationally.

There's a little education in economics for you. Bubbles are about things being artificially inflated due to speculation driving demand. Nothing about AAPL stock price is speculative. If the company maintained its anemic P/E ratio and just kept increasing revenue on their current (or half their current) trajectory the stock price would break $1000 in the next 12 months.

I'm glad you mentioned Amazon. That's one stock I don't get. They have a quarter where they barely make any money and admit they might post a loss the following quarter and their stock goes up 3-4%. All on the thought that the $$ they're spending on infrastructure will pay handsome dividends in the future. Maybe that will be the case but seems a bit speculative to me.

 

[pandamonia]

Right.... because the valuation of AAPL is completely based on speculation rather than revenue, earnings and assets. "Bubbles" are defined as



(see Wikipedia for multiple references on that definition).

If anything, AAPL has been the anti-bubble for years now. The P/E ratio of speculative stocks like Amazon (AMZN) is over 290. The P/E ratio for AAPL has been hovering at 14 to 16 all year (currently 15.6). The P/E ratio is even lower for AAPL if you calculate the forward P/E (i.e.: price to earnings using this year's earnings). It gets even more insane if you look at the fact that Apple has one fifth of the market capitalization in no-risk cash or cash-equivalent assets and the company has zero debt. If you subtract the cash assets from the market cap and then recalculate the P/E it falls well below 10. For reference, Google's (GOOG) P/E ratio is 20 and Microsoft's (MSFT) is about 15.4. So investors are being more speculative on GOOG and just as speculative on MSFT, despite AAPL outperforming both companies consistently quarter after quarter.

If you want an example of a "bubble", then look at Amazon (AMZN). With their 290+ P/E ratio, investors would have to see Amazon garner near 100% of all retailing (not just online retailing) in the next 10 years without drawing government regulation because of monopoly power on price controls. AMZN is the the definition of a "bubble" stock. There are no fundamental "intrinsic values" to support Amazon's stock price -- it is 100% speculation that something about Amazon's formula will one day yield Apple-like profit. On the other hand, Apple is doing "Apple-like" profit today with potential to grow in the markets they profit in considering their current share of the market and their opening up to new geographies internationally.

There's a little education in economics for you. Bubbles are about things being artificially inflated due to speculation driving demand. Nothing about AAPL stock price is speculative. If the company maintained its anemic P/E ratio and just kept increasing revenue on their current (or half their current) trajectory the stock price would break $1000 in the next 12 months.

institutional investors cant hold more than a few percent in 1 company as the company gets more valuable then the stock will have to be sold. They by far make up the biggest trades in the world and as the value gets higher the more down pressure from the biggest investors there is. This is why no major stock stays as high as it does. Look at MS.

 

[chrmjenkins]

Apple has less than 10% market share in every single one of their major revenue streams (spare their shrinking iPod line). ipods hit about 70% market share. microsoft hit 95% market share in OS's. theres no reason why apple cant hit at least 70% in all of their markets, since they're the only ones who are excellent at software/device integration/innovation/curation. add a tv to the mix, theyll edge out competition that much more surely. <10% market share, should be no reason not to hit at least 70%. that's 7x higher than the stock is now.

Their tablet market share is north of 60%. Their domestic share of smartphone sales is around 30%. Macs are around 11 to 12% I believe. Who knows what their streaming device market share is. Not saying there isn't potential for growth, but less than 10% is a gross mischaracterization for some of their markets.

 

[pandamonia]

Only in your Apple hating wet dreams. You went Android but you're still here. Still gotta have your Apple fix?

because i own a mac. At least im not a sad pathetic fanboy with no mind of my own.

 

[Intarweb]

Correct, and if there are any bubbles it's with non-producing companies such as Twitter, Facebook, and Groupon. I can't fathom how anyone could justify owning stock in any one of them.

Groupon you can see why. They get revenue that's visible. Twitter and Facebook, no way. Internet advertising is as overrated of a source of revenue going. It's overinflated big time with respects for Twitter and Facebook.

 

[jonnysods]

Goodness I should sell the 1 share I own through OneShare.

 

[Whaaahu]

.... but but but that's because ummm.... there is no Android stock on the stock market, and ummmm... because if there was, Apple stock would probably be like NEGATIVE 660 in value instead of positive 600. Yep, that's the ticket... and it's all fanboy sheep who buy the stock anyways, and there will be a crash and correction soon, and... and....

I almost took this seriously.

But FYI for anyone who did. Android is given away for free. If there was an "Android"stock, It would go out if business due to lack of income.

 

[flux73]

One big bubble ready to burst.

The P/E ratio is only a little bit over 15. The extraordinary thing about their high valuation now is that it actually looks like the opposite of a bubble. Factor in a potential customer base of 650 million people if/when they partner with China Mobile, a 7 inch iPad Mini, and iTV, and $1000/share looks easily achievable. And if all three of these happen (and Jobs really did manage to "crack" the TV problem), $1500 within the next 2-3 years actually looks realistic. It's been hard for me to believe too as the stock appears to be helium filled. But by every metric that I can think of, the stock still looks cheap.

 

[AppleDApp]

I almost took this seriously.

But FYI for anyone who did. Android is given away for free. If there was an "Android"stock, It would go out if business due to lack of income.

Android is part of GOOG as iOS is part of AAPL.

 

[thekev]

One big bubble ready to burst.

The problem with that theory is it would make the assumption that growth is entirely tapped out. It's not necessarily a bubble if value is calculated by their current earnings and growth records. Some of the volatility comes from short term bets.

 

[macuser1232]

Nice job Apple! Keep it up! Let's pass Microsoft! By the way, if you want a successful stock buy Activision Blizzard!!

 

[ericrwalker]

Sell before the increases in capital gains taxes.


Wish I had invested in Apple when I was dabbling in the stock market.

 

[iMikeT]

Congrats to those of us holding a long position on AAPL. Here's to kicking more ass!