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Apple's Market Capitalization Hits Record $700 Billion
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The split was a chance for the normal people to make money. Everyone who can afford to buy a share, and does not do it, is a fool.
Of course the total value of the company drops. Not in the sense that it makes Apple a worse company, or a worse investment, but in the sense that money that once was owned by Apple is not owned by Apple anymore.
Of course if you do something stupid like HP, buying a company for 8 billion or so and then find out it's worth only 2 billion, that's 6 billion down the drain, and because the number of share holders stayed the same, each share is worth less. In the case of Apple, if they spend 6 billion on a share buyback, there are fewer share holders afterwards and each share is worth the same as before, but the company is still worth 6bn less.
Present value of future earnings divided by the number of share is what supposedly the current stock price represents (forgetting all the financial engineering, dividends and whatnot that can occur to manipulate things). If future earnings just track inflation. The stock price would also track inflation.
The bigger the current stock price * shares compared to current earnings, the higher the expected growth in earnings is. This is were the guessing games reside. How big will that growth be?
That's theory. In practice, since the mid 1990s, earnings and stock price seem to have gotten a divorce in the case of many tech companies ;-). So much so that it all looks a lot more like gambling than anything else. Otherwise, Amazon's valuation (and many other tech firms), makes no sense at all.
When a company gets larger and saturates its market (this always happens eventually for a big company). The company future earnings grow just a bit faster than inflation. Then, a company becomes a blue chip and no longer a growth stock.
This isn't bad per say, unless you want a high rate of return. Apple, will reach such a plateau eventually. Its a good thing. Much better than having collapsing earnings and an ever shrinking company. This has happened to many major companies in the past.
To be fair, eventually AAPL will be overbought. Although that's bad for the stock, not the company itself.
Eh. To be fair, their product quality has been going downhill in a lot of ways since before Jobs died.
All you stockholders can thank me - I bought some April 95 calls for $8 2 months ago and sold them at $15 a month ago after the stock paused at about 110. Those calls are now worth $25. Nice gain, but man is it painful to watch what I don't own double in a month.... I do have common still, but that 10% gain feels like peanuts (spoiled, I know).
The total value does not drop, at least not in market terms. Assets are not available to ordinary investors unless the company decides to make them available through dividends or buybacks. Otherwise, those assets might as well be on the moon. Equity investors own a share of earnings. That is all they own unless they buy all of the equity and thus own the entire company. At that point and only at that point would they have access to company's assets (and would assume its debt too).
Mergers, especially when they involve stock swapping, are totally different animals.
And yet their selling more products than they ever have before. How is that possible?
I own a pretty good chunk of apple that I am debating selling soon. I have two chunks of shares actually, the first of which has already been held over a year therefore now is in long term gains tax bracket. The second larger chunk I would like to hold on until at least February so it too becomes long term instead of short term (IE, earnings taxed much less). I believe with the iPhone 6 and plus doing so well the market will hold on, but I'm getting nervous.
This stock is all about the iPhone. I bought it back in the pre-split ~$400 range due to suspected larger iPhones eventually showing up, and the consumers gobbling them up. The upgrade cycle has been insane to say the least. However, once it is over, I see a LOT of potential room for this stock to fall. I saw a statistic that something like 6 other stocks have had a market cap over 600 billion before, and nearly all of them are now worth ~1/3 of that. The Smartphone market eventually WILL mature, and once the larger screen switch is through I think the iPhone may very well enter into more of an iPad like upgrade cycle. Hardware wise, the 6 plus is essentially doing everything I'd like in a phone, and at this point it becomes more about the software. I just think Apple are going to have a hard time convincing the majority of people to keep upgrading a device like the 6 plus every two years.
This stock is all about the iPhone. I bought it back in the pre-split ~$400 range due to suspected larger iPhones eventually showing up, and the consumers gobbling them up. The upgrade cycle has been insane to say the least. However, once it is over, I see a LOT of potential room for this stock to fall. I saw a statistic that something like 6 other stocks have had a market cap over 600 billion before, and nearly all of them are now worth ~1/3 of that. The Smartphone market eventually WILL mature, and once the larger screen switch is through I think the iPhone may very well enter into more of an iPad like upgrade cycle. Hardware wise, the 6 plus is essentially doing everything I'd like in a phone, and at this point it becomes more about the software. I just think Apple are going to have a hard time convincing the majority of people to keep upgrading a device like the 6 plus every two years.
Bubble. Apple followed Samsung lead on inflating their cell phone sales by upping the screen size.
agreed. I think 2 years from now we will see a drop in sales domestically. China might help global sales increasing tho.
Don't tell anyone here that
Thankfully that means that those of us who can separate a good investment from a company that we are fans of can make a ton of money after it goes back down again.
Perhaps I'm mistaken, but I thought Microsoft topped $800B in ~2000?
Edit: I am mistaken, you are correct. Microsoft hit their high of $620B in December 1999.
When Apple's stock price is low, and when their profits are less than the year before, people say its a sign of failure.
When Apple are doing well financially, people say 'money isn't everything, it's good products that matter.' Apple can't win.
When Apple are doing well financially, people say 'money isn't everything, it's good products that matter.' Apple can't win.
Woulda
Coulda
Shoulda
is a recipe for me buying stock in acid indigestion relief makers. You doubled your money (or near...) Congratulations! Think how bad the people that bought puts at $95 2 months ago feel.
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P/E ~ 18:1 means they're slightly overpriced to me. I prefer to have companies at the 16:1 range.
However, they can raise their earnings, too...
Rule #2: don't buy when the price is at a 52-week high. That was my point, I agree on #1.
Not bad for a company 'doomed to failure' after Steve Jobs died.
Pretty sucky for a company who can't get their **** together. How bout spending some cash to make sure they don't release updates that needs to be recalled the next day and installing quality RAM among a gazillion other things.
Deep organization issues with iCloud? Try spending some cash to fix that too. Oh and the mess that is iTunes.
Who else in the mobile market would you rather invest in?
There are only 3 smartphone manufacturers actually making money: Apple, Samsung and LG.
The sad thing is... there are 63 smartphone manufacturers around the world.
Samsung is losing profits and losing sales (they're having trouble selling their #1 product, the Galaxy S5...)
And does LG have anything in the pipeline that will radically increase their growth?
So that leaves Apple... who is currently increasing profits and increasing sales... and has been doing so for years.
Will Apple keep growing forever? Probably not... no company can grow forever.
And that leads us back to my original question: who else would you invest in?
Hmm, I didn't see anything like that hurting Microsoft in the late 90's. This is business, not mindshare among those who want everything to be bug free. And yes, I'm very disappointed in those things...however, if problems with software and disappointments in hardware for tech people controlled the stock market, Google would be a penny stock.
Market Cap doesn't really mean anything. It's just the total number of outstanding shares X the value of the share.
Some people say it's what the company is worth to investors. And this is wrong too... the company's worth is the total of all its assets at any point in time.
But whatever... if we're just talking numbers... I'm long BABA!!!
Some people say it's what the company is worth to investors. And this is wrong too... the company's worth is the total of all its assets at any point in time.
But whatever... if we're just talking numbers... I'm long BABA!!!