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Apple's Stock Reached New All-Time Highs This Week

One2Grift said:
We will have to agree to disagree on the interpretation of Buffett's statement 'revenue moat with an honest leader' and what it means.

As far as what is good for society(consumers) regarding business, monopolies are rarely good. People should keep this in mind when there is gov takeover of a sector. State run ___ almost always ends up with less for more cost (whether paid directly or indirectly). Standard Oil over a century ago or Microsoft 2 decades ago, the effect on pricing and quality can be dramatic.
But to take the only US (close to)monopoly I personally know of as an example: Google's 90+% web search business. Has it been bad for consumers? IMHO from a security privacy perspective yes(but that's not per se due to the monopoly) but from web search availability and advances? Arguably once could say it has been a boon to the web search capability for consumers.

But consumers are dreaming if they think: A. a big business will not use its deep pocket leverage. That can be bad but it can also be good (quicker downward pricing pressure for example) for consumers. B. that there will never be big businesses that can leverage their deep pockets, infrastructure, or deep customer penetration resources. Most business spaces start out with many but it gets whittled down to a few ](in the supply chain it can get whittled sometimes to one). In free enterprise it isn't likely to happen any other way than growth of sector to big business status . C. Consumers themselves make this choice. If you can educate them and get others to, a difference may be made.
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Yep, let's agree to disagree on Buffett's statements.

There are many other monopolies than Google search. Not sure why you think that is the only one and then in the same post point out that on the supply chain there might only be supplier. Anyway, here is a weird little monopoly: cheerleading. Sure, consumers have a choice. You can not do cheerleading team. That is basically your choice. But you can't do cheerleading team and make that your thing that you do in a serious way in school and not pay Varsity sports (bought by Bain Capital for $2.5 billion). They run the sport, 80% of the tournaments and sell the uniforms (which are basically mandated uniforms). Their goal is monopoly power and then set prices that the kids/parents pay.

mattstoller.substack.com

How a Cheerleading Monopolist Played Rough During the Pandemic

After mass layoffs, Bain Capital's Varsity Brands is now a "cash flow" machine. It also faces risks from an increasingly angry cheer community.
mattstoller.substack.com mattstoller.substack.com

Yep, companies left unchallenged by laws will eventually aggregate and seek to get bigger. Why do you think that is? It is because monopoly power is where the best profits come from. They all want to get to the point that Buffett lays out as the ideal situation (from the business or investors position): have a monopoly where you can dictate price to your customers without too much worry about quality.

 
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Abazigal said:
I feel it’s a matter of perspective.

Take the Apple Watch for example. It’s as successful as it is in part because Apple is able to integrate it with the iPhone on a level that the competition can’t.

Which then raises the question - to what extent is Apple allowed to privilege their own products with proprietary APIs vs having to make them equally accessible to all developers across the board?

On one hand, the promise of supernormal profits is precisely what drives companies like Apple to continue making great products for us consumers to buy.

On the other hand, am I as an iPhone user disadvantaged by essentially having the Apple Watch as the only “real” choice for me? The counterpoint is that if Apple were forced to give the competition access to the same underlying technology, they may not have bothered to come up with a product like the Apple Watch in the first place, because it would be too much work for no real profit. We would still be using fitbits and pebble watches and be worst off for it.

I think this is what he meant by “moat”. All my Apple products work so well together that there is less incentive to shop for competing alternatives. Is this unfair to the competition? Perhaps, but for the moment at least, I literally don’t care because I would rather have 1 great choice than numerous crappy ones.

That to me is the paradox of choice. If I am not getting more of what I want, then it’s meaningless to me. I care not for more choice, but for more meaningful choice.
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I also use a lot of Apple stuff and love how good it is. The cost of the stuff kind of doesn't matter to me as long as it works. Apple has a moat and I think it is close enough to a monopoly that Apple's biggest risk these days is government action. I would not be surprised if Apple were broken up for Antitrust reasons in the next decade. Not saying it will be. Currently antitrust laws are only barely enforced in the US. But there are strong hints that this is about to change very dramatically.

I used a Buffett quote and I honestly think this is what Buffett means by a moat:

“The single most important decision in evaluating a business is pricing power,” Buffett said. “If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business.” The “big three” rating agencies—Moody’s, Standard & Poor’s, and Fitch—controlled 95 percent of the rating-agency market, an insurmountable advantage over would-be competitors. “If you’ve got a good enough business, if you have a monopoly newspaper or if you have a network television station,” Buffett concluded, “your idiot nephew could run it.”

The best moat is a monopoly. Smaller moats are situations with limited competition and enough scale that no one can get big enough to challenge you (and many businesses these days just regularly buy any plausible competitor and put a stop to competition in that manner (see Facebook buying Instagram)). Buffett likes them all and looks hard for companies that have these characteristics.
 
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Absolutely incredible! What's even more incredible is how everyday ordinary people have been participating in Apple's success while blowhards like Steve Ballmer got it completely wrong. All you had to do was watch Steve's iPhone keynote where it was apparent that iPhone had a 5-year lead on the rest of the industry (Palm Pilot, Blackberry), then put a few dollars into Apple. If you did that, you might just be a millionaire today. It didn't take insider trading, it didn't take day trading, it didn't take split second Wall Street research. All you had to do was USE YOUR EYES and think, and you would have been rich. Many of us are!

Thank you Steve and Tim!
 
Yokon54 said:
Even bringing up to tulip craze or tech bubble completely misses the point on AAPL. They are literally the most profitable company in the world. There are no similarities. Apple has consistently produced earnings other companies can only dream about producing. They have also bought back $450B in stock and continue to buy back $20B per quarter while producing cash flow no other company can replicate.

The average company historically trades at 20 times. You can have an argument with yourself if this is reasonable. Apple is not the average company. 32 is completely reasonable, yes. Companies are valued for all future cash flows until judgment day.

Stocks are valued relative to other stocks and other investments as well. Apple at 32 may be higher than you like, but it’s lower than AMZN at 70, NFLX at 65, and MSFT at 40. With interest rates at 0, stocks are even more valuable because they are the only game in town.

Considering Apple’s double digit growth in top and bottom line, their dominance in the market, the recurring services revenue, buyback and cash position, it’s clear why the multiple is higher than the average company and is totally reasonable relative to other tech and the current interest rate environment.

You’re still not getting Apple’s story. It was completely undervalued for all the reasons I mentioned even at $1T. I bought a huge amount of the stock in 2014 because of this thesis. I understand the company inside and out because I have a huge financial interest in understanding it.

Apple produces over 2X more earnings than Intel, AMD, and NVDA combined and has a different capital structure. As an example, Intel has huge fixed costs and capital expenses for manufacturing chips. Apple doesn’t do that. AMD trades at almost 40 times earnings and makes about $2B in profits to Apple’s $75B in the last 12 months. NVDA is at almost 100X earnings.

Point is, Apple is far down the list of “expensive” stocks as I just proved. My advice is to ask yourself if you should buy it the next time you see it trading lower.
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Apple is the most profitable , yes, but it was the most profitable in 2019 too but the stock price was 3x less. Saying that Apple stock was undervalued is something I can not accept simply because there are armies of people around the world to hunt for the best stocks to invest in along with all their algorithms, phd holders, and computer AI analysis of the market and NONE of them saw that AAPL was undervalued?! The fact that its P/E ration is 32 tells you its overvalued. Will you invest a $1M with your money with me if I told you , you will only make a profit after 32 years? This is exactly whats going on even if it is the most profitable this is what you are getting not to mention the risk of it losing business to any new threats like bad management, bad investments, economic downturn, or new competitors.

Even if the P/E ration is 32 on the hopes that the stock will grow even further, how much do you think Apple can grow? To infinity? there is a cap, there is only so many people in the world, and only so many customers to sell iphones to. The only arguement I can accept against this is Apple grows into a more of a holding company that invests in other businesses hence turning from an electronics company to a holding company. Basically they start building cars, airplanes, furniture, launch a telecom service... If that is your arguement yes I can see Apple growing that way.

Indeed, they kind of started with a streaming service, a payment service(Apple Pay) and Apple card, IoT, ...etc . I can accept that-although they still did not show they are successful there- but I can accept it but as far as iPhones and Macs I just do not see much growth in the future. It can remain as is, but not grow much bigger. Other companies that has done so are Amazon which was an online book shop into a AWS, Microsoft with their videogames branch.
 
MacBH928 said:
I get it, but do you know how much $1T is? thats more than total worth of Intel+Nvidia+AMD combined. I doubt Apple gained so much more value because it decided to use M1 chips in their computers.

Intel+Nvidia+AMD are running the whole world on their CPU and GPUs. The WHOLE WORLD. Did Apple really gain the value of these 3 companies over a year's time? I doubt it.
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It's not using M1 chips, per se. It's about Apple having an enormously bright future now being in control of their destiny, unshackled from Intel and their piss-poor offerings and roadmap (and product delays). That is easily worth an extra $1trillion for a company Apple's size with 150,000 employees worldwide and enormous revenue.

In the end, the market has spoken.
 
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Yo shall we ape into DIDI stonk now that it is dirt cheap? Apple, Uber and Tencent are investors in that thing.
 
MacBH928 said:
Apple is the most profitable , yes, but it was the most profitable in 2019 too but the stock price was 3x less. Saying that Apple stock was undervalued is something I can not accept simply because there are armies of people around the world to hunt for the best stocks to invest in along with all their algorithms, phd holders, and computer AI analysis of the market and NONE of them saw that AAPL was undervalued?! The fact that its P/E ration is 32 tells you its overvalued. Will you invest a $1M with your money with me if I told you , you will only make a profit after 32 years? This is exactly whats going on even if it is the most profitable this is what you are getting not to mention the risk of it losing business to any new threats like bad management, bad investments, economic downturn, or new competitors.

Even if the P/E ration is 32 on the hopes that the stock will grow even further, how much do you think Apple can grow? To infinity? there is a cap, there is only so many people in the world, and only so many customers to sell iphones to. The only arguement I can accept against this is Apple grows into a more of a holding company that invests in other businesses hence turning from an electronics company to a holding company. Basically they start building cars, airplanes, furniture, launch a telecom service... If that is your arguement yes I can see Apple growing that way.

Indeed, they kind of started with a streaming service, a payment service(Apple Pay) and Apple card, IoT, ...etc . I can accept that-although they still did not show they are successful there- but I can accept it but as far as iPhones and Macs I just do not see much growth in the future. It can remain as is, but not grow much bigger. Other companies that has done so are Amazon which was an online book shop into a AWS, Microsoft with their videogames branch.
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A lot of stocks were lower in 2019 and 2009 and 1979. Doesn’t matter. Apple is more dominant than even a few years ago, but they were not getting enough credit for being more than a hardware company. The perception has changed. It’s why I bought the stock and bet big with my wallet. It played out.

The buyback is also a huge factor in buying the stock. Apple doesn’t have to grow to increase its share price. Apple has bought back $450B in stock the last 7-8 years. To give you perspective, Apple was only worth around $350B when Steve died. They continue to buy back $20B per quarter and just increased the program.

As long as Apple is buying shares and practically printing money, it’s going higher. It’s math at this point. They are also the best executing company on the planet with a top 3 CEO in the world. People can’t live without their products.

My argument has already been proven. The market has proven I’m right. The price is the price, just like I had to accept when I bought it for what I considered below market value.

In the current 0 interest world, stocks are going higher too.

I already have more than $1M in AAPL shares, so yes I would invest for the reasons I’ve already mentioned. We’ve been over that 30 times earnings isn’t even expensive relative to its peers. It’s still too cheap in all likelihood.

Youre going to have a lot of trouble building wealth if you’re caught up in trying to wrap your head around 32X earnings being overvalued for the best tech stock in the world, with double digit growth, a massive buyback, a mountain of cash, and a durable competitive advantage. This is how stocks works. I already told you an AVERAGE company trades at 20X earnings. Apple is FAR above average and is only 32. AMZN is 70 and I own shares in that of and feel great about it.

If macro factors change like significantly higher rates and/or micro factors in the individual businesses change, I will change my perspective. At this point, Nothing has changed and the business is stronger than ever.

If you think it’s overvalued, short it. Will only help me when you get squeezed like every other short who has bet against Apple. My advice is don’t do that. Bet against a crappy company.
 
citysnaps said:
It's not using M1 chips, per se. It's about Apple having an enormously bright future now being in control of their destiny, unshackled from Intel and their piss-poor offerings and roadmap (and product delays). That is easily worth an extra $1trillion for a company Apple's size with 150,000 employees worldwide and enormous revenue.

In the end, the market has spoken.
Click to expand...

Well the market was wrong when the stock of Lehmann brother reached all time high of $86 in early 2007 because it filed for bankruptcy in Sept. 2008. There is a lot of examples of this in the history. All stock holders of any one company think their stock is good and will make them grow even richer.

Yokon54 said:
A lot of stocks were lower in 2019 and 2009 and 1979. Doesn’t matter. Apple is more dominant than even a few years ago, but they were not getting enough credit for being more than a hardware company. The perception has changed. It’s why I bought the stock and bet big with my wallet. It played out.

The buyback is also a huge factor in buying the stock. Apple doesn’t have to grow to increase its share price. Apple has bought back $450B in stock the last 7-8 years. To give you perspective, Apple was only worth around $350B when Steve died. They continue to buy back $20B per quarter and just increased the program.

As long as Apple is buying shares and practically printing money, it’s going higher. It’s math at this point. They are also the best executing company on the planet with a top 3 CEO in the world. People can’t live without their products.

My argument has already been proven. The market has proven I’m right. The price is the price, just like I had to accept when I bought it for what I considered below market value.

In the current 0 interest world, stocks are going higher too.

I already have more than $1M in AAPL shares, so yes I would invest for the reasons I’ve already mentioned. We’ve been over that 30 times earnings isn’t even expensive relative to its peers. It’s still too cheap in all likelihood.

Youre going to have a lot of trouble building wealth if you’re caught up in trying to wrap your head around 32X earnings being overvalued for the best tech stock in the world, with double digit growth, a massive buyback, a mountain of cash, and a durable competitive advantage. This is how stocks works. I already told you an AVERAGE company trades at 20X earnings. Apple is FAR above average and is only 32. AMZN is 70 and I own shares in that of and feel great about it.

If macro factors change like significantly higher rates and/or micro factors in the individual businesses change, I will change my perspective. At this point, Nothing has changed and the business is stronger than ever.

If you think it’s overvalued, short it. Will only help me when you get squeezed like every other short who has bet against Apple. My advice is don’t do that. Bet against a crappy company.
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I do not argue that Apple is not a solid business, but my arguement is, isn't a stock holder/buyer looking for growth of the stock? As in even multiplying profits many times over and gaining more market share?

As why I do not short it is because the stock value is based on the perception of the public. Nike makes shoes for $15 and sell them for $400 and people are fighting over them because they are "exclusive collection". Tesla P/E is 689 , even Elon Musk said its over valued but hey people think whatever they want to think.

I can see Apple holding stock price, maybe slowing growing-which means there are other companies growing faster and hence worth investing in, but I no longer see Apple's stocks quadrupling any more taking the company total market cap. to outrageious $8T . We will not see the growth we have seen like from 1997->2007 and from 2007->2017.

If you believe so much in Apple when do you invest in anything else like AMZ?
I would highly appreciate it if you could explain to me the idea about stock buy-back. I know in a simplified manner this is basically some partners are paying to buy out the other partners, but why is this good? You are paying for it either ways its not "free shares" . Why does Apple care to do that? And who is going to sell when everyone thinks Apple is only going to grow bigger and bigger?
 
MacBH928 said:
Well the market was wrong when the stock of Lehmann brother reached all time high of $86 in early 2007 because it filed for bankruptcy in Sept. 2008. There is a lot of examples of this in the history. All stock holders of any one company think their stock is good and will make them grow even richer.
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You may not be aware that the 2008 collapse of Lehman Brothers was due to (in a nutshell) being involved in shady subprime real estate mortgages that defaulted and employing accounting tricks in order to mislead investors and government regulators.

Are you alleging Apple is on the same path, engaged in similar activity?
 
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citysnaps said:
You may not be aware that the 2008 collapse of Lehman Brothers was due to (in a nutshell) being involved in shady subprime real estate mortgages that defaulted and employing accounting tricks in order to mislead investors and government regulators.

Are you alleging Apple is on the same path, engaged in similar activity?
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you are missing the point, the point is that the market is not always right. There is a lot of other examples like Yahoo, Blockbuster, Atari, Commodore, Sears(I guess), PanAm... list goes on. All these companies had investors and stock price hoping it was going to grow bigger and succeed, obviously why the buy share in the first place?!
 
graafisk said:
You've clearly held your investment more than a year, so you should be good to go! Sell off a few shares whenever you need some cash to enjoy life, let the remaining continue to grow... that's my method. 😇
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I went in heavily when the original ATT-exclusive with royalties iPhone deal was announced – sounded like they were essentially just going to print money – and frankly, repeatedly selling off shares in an ever-futile attempt to better diversify my holdings have been some of my more regretted decisions. 😆

Taking the hit to convert my retirement accounts to ROTH ones a decade back, however... also a no-brainer, and certainly one of my best ones. Sure wish all the AAPL was in those. 😇
 
DocMultimedia said:
So where is the front page story that Apple closed at all time high today? $149.15. Are MR folks waiting for $150? Yummy Apple. 🤑🤑🍏🍏
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it’s excruciatingly close to 150 in the morning session. 149.98 was last trade price. I should be sleeping but to see that 150 level hit is too much to pass up (early morning session is slow trades low volume) (the 149.15 is the 4pm close price).

EDIT: ONE HUNDRED AND FIFTY!!

1626340824167.jpeg
 
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One2Grift said:
it’s excruciatingly close to 150 in the morning session. 149.98 was last trade price. I should be sleeping but to see that 150 level hit is too much to pass up (early morning session is slow trades low volume) (the 149.15 is the 4pm close price).

EDIT: ONE HUNDRED AND FIFTY!!

View attachment 1806629
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On this one I wish (in my previous posting) I had been wrong about today's price action. It hit 150 pre morning and again within an hour of opening. But then it went down to near 147 before ending in the 148 area. It was fighting the larger macro environment that is sideways slanting downward. Pretty much all big cap techs were hurt by it.

If another positive story or two comes out with an up trending larger macro? It will bust solidly through 150. Though I still expect it to retreat again and consolidate in the coming few trading days, if enough volume closer to the 155 range could happen, that consolidation area/support area/retreat could hold at 150. It's hard to impress how much additional upside could be gained if the consolidation area is above the big psychological number of 150. Provided the larger macro environment doesn't cause headwinds, a 150 consolidation area moves a price target of 170 to a much likelier target within a handful or so of weeks.
 
MacBH928 said:
I would highly appreciate it if you could explain to me the idea about stock buy-back. I know in a simplified manner this is basically some partners are paying to buy out the other partners, but why is this good? You are paying for it either ways its not "free shares" . Why does Apple care to do that? And who is going to sell when everyone thinks Apple is only going to grow bigger and bigger?
Click to expand...

A stock buy back, which Apple does all the time, is simply a way for a company to directly return money to specific shareholders who want "out". Those are the folks selling their shares. Many Apple shares are sold every day, an equal number are bought. That is why we have stock prices. Apple does buy backs and then retires the shares (i.e., those shares will no longer get dividends and they won't be voted in shareholder votes for the board of directors). So the remaining shares now have a slightly larger percentage of the future dividends and asset value of Apple. So they are slightly more valuable. Apple specifically reduces the supply of publicly traded shares.

Companies do this instead of sending out dividends mainly because dividends get taxed. Also there are historical and market reasons that a company does not want to ever decrease their dividend. The stock market price of a company that does that gets immediately reduced. So companies tend to be very conservative about what their dividend is and they set it at a level they are very confident they will always be able to pay. Each decision to raise the dividend is weighed against the risk of ever not having enough available cash to pay it in the future years. Apple pays a modest dividend. But has had so much cash coming in for so long, they started doing stock buy backs.
 
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