Apple's Stock Soars Past $1,000 Pre-Split Price as Bulls Think 'Golden Opportunity' to Buy Remains

[IJ Reilly]

I think these people have no idea what it takes for companies to achieve high market cap values. Obviously, most companies have never had a total market cap of $250B but yet some think it's easy for Apple to simply tack on another $250B to reach that elusive $1T mark. Just a few months back there were people claiming both Amazon and Alphabet would beat Apple to that $1T market cap. I guess it's possible with big investors happily throwing immense P/Es on companies based on vague future performance. Take Microsoft with its P/E of 30 or so. Seriously, how does it earn that P/E when Apple doesn't. Based on fundamentals it definitely doesn't work. Nothing in Microsoft's fundamentals are that much better than Apple's to warrant such a high P/E. I understand Amazon is highly valued for its ability to ruin every other retailer in the U.S. so at least that makes some sense.

I don't know if Apple will reach that $1T mark and I really don't concern myself about it. As long as Apple continues to boost dividends I'll be satisfied. A $1T market cap probably isn't sustainable so I'd rather Apple just reach a sustainable level and stay at that mark for a couple of years.

You might be misreading the fundamentals. PE is a trailing indicator, it is based on the last four quarters, three of which for Apple have been declines in earnings. If you look at PEG, the forecast of multiples vs. anticipated earnings growth, MSFT and AAPL are within hailing distance of each other.

Also, while you are right not to be concerned with magic numbers such as trillion dollar market caps, you are still subscribing to magical theory when it comes to a "sustainable" market cap. Market caps that don't grow are dead stocks. You really should not want to own one. Nobody else does.

 

[theMaccer]

lol good luck to you, if you are buying right now

 

[thekeyring]

Why do I have a feeling that all we are going to get this fall is an iPhone 7S? It's like the more money Apple makes the less innovative they get.

The iPhone 7 Plus dual camera is a great example of innovation, hardware and software integration inside a package that doesn't appear very innovative because the design looks pretty much exactly like the iPhone 6 series.

What's amazing though is Apple clearly has features which make people chose their phones.

While the completion added bigger screens Apple worked on other things so that it had no trouble selling the iPhone 5S in a market that also contained the Galaxy's S4 and Galaxy Note. Then one upgrade cycle later they add larger screens and see insane sales.

Now we have an iPhone with a design that's getting old, but enough features and benefits that it still sells remarkably well, leaving Apple in a position where they can walk in, modify the design and carry on doing insanely well.

 

[Analog Kid]

A couple of factoids for the few who actually care about this stuff: First, the real current "pre-split" value of an AAPL share is around $8,000, figuring in all the stock splits since the beginning. It's a silly number no matter how you state it, but picking the last split is completely arbitrary, and really makes no point whatsoever. Second, the total market cap for AAPL is still a bit lower today than it was two years ago. Based on the number of shares outstanding then and now, AAPL would have to cross $145.50 to set a record valuation. If you really like to stare at stock tickers then that's the number of interest.

With the rise of computational trading, I wonder how much money those algorithms make off of people's irrational attachment to numerology... Say AAPL crossed 143, and people answer "meh". Point out that there's an arbitrary 7 somewhere in history, and if you multiply that 7 by this 143 you get something we can round down to 1000 and everyone goes wild!

 

[IJ Reilly]

With the rise of computational trading, I wonder how much money those algorithms make off of people's irrational attachment to numerology... Say AAPL crossed 143, and people answer "meh". Point out that there's an arbitrary 7 somewhere in history, and if you multiply that 7 by this 143 you get something we can round down to 1000 and everyone goes wild!

Yes indeed. In psychology this is called round number bias. It is a well-documented affect, so probably somebody has figured out how to program trading to take advantage of it, of course to the detriment of those who are less aware of it. For that reason alone I hate to see these arbitrary numbers promoted, since they provide no meaningful information or context, and can be so misleading. Arbitrary is not your friend, especially not in investing, and probably nowhere else either.

 

[amirite]

Sigh. The stock is at record highs because Wall Street sell side analysts think this year is going to be another iPhone 6 like year (which they've come up with the stupid "super cycle" name for it). Then next year the stock will drop when the rumors indicate an "s" type upgrade and the sell side analysts get worried about tough comps. Heck the stock will probably drop today because Samsung is announcing their new phone and the tech media is hyping it like crazy.

Wow sounds like you could make a killing in the stock market with that crystal ball of yours.
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lol good luck to you, if you are buying right now

Thanks!

 

[dan110]

Stinks of "pump and dump".

 

[Pootie Tang]

What goes up.....

The Vanguard 1 orbital satellite went "up" in 1958. Its still "up." Yes it will come "down" someday but a nice 59 year run is not too bad!
I bought my first AAPL shares in 1997. The first time I sold any stock was a couple of months ago, to do some profit taking. The nice thing about owning Apple stock is the quarterly dividend checks pay for my purchases of Apple products so I don't care what they cost and I can sell off at any time if it looks like too precipitous a drop.
No one should ever put all their "eggs" in the AAPL "basket;" stocks go down, bonds go up.

 

[dogslobber]

Pump and dump is the classic "analyst" strategy.

 

[Pootie Tang]

There is no evidence of that. The only Apple prices that fall are for products at the end of their life like the MBA. The MBP will not fall in price over time. Apple knows that as Mac users we don't have any choice but to pay what Apple demands so they will continue to squeeze us all for every penny they can get away with.

Buy some stock, get dividend checks, pay for Apple purchases in part with Apple's money.

 

[braintumor]

Bubble, bubble, bubble...

 

[Keerock]

The new MacBook Pro absolutely slays and most 2016 MBP owners can't be happier with it. That's because they actually bought it and loved it, rather than looked at the paper specs and scoffed.

Don't believe the negativity here; the MacWhiners are the exception to the rule. Just reading this website, you'd think that everybody hates the 2016, but that couldn't be further from the truth.

Amen!
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Mystified but I'll take it.

This is a telling signal that Apple is now purely an iPhone company. Everything else Apple sells is just an accessory for the iPhone. With all the rumors of an all new "blockbuster" iPhone pending Apple is getting lots of positive reinforcement from Wall Street that Apple's other products simply do not matter. So it's no wonder, for example, that the most current iMac was released in 2015. It's only us Mac users that care but we are a pittance of Apple revenue. Apple isn't going to live or die on Mac so of course its not motivated to update here at any regular pace.

I think you are half right. Yes, iPhones are driving the share price (or they were also kicking it in the teeth) but Apple is the deepest "eco-system" company on earth. They know they need to stave off the Surface Books and Galaxy tabs lest they lose and iPhone user over to the other side.

The Mac Pro is the exception. I think Apple's lack of attention to it is criminal and shows they do not believe it is even part of the "eco-system".

I think Apple is flat out killing it across 70% of their product lines. I have confidence they will shore up the frayed edges for iPads, Mini, Airports, TV, and Pros.

 

[iop]

I think it's alright to have AAPL as a small portion of the portfolio, but going all in sounds way too risky for me. The recent rally is due to expectations of significantly greater profits in the future. However, considering iPhone is the biggest money-maker in the Apple product family, should iPhone 8 fail to impress Apple's customers, the share price trend will quickly reverse. This is a real risk that needs to be taken into account. For institutional buyers AAPL is only a small portion of their well-diversified portfolios, whereas for a small amateur investor with 50k in the account, a hundred shares will constitute nearly 30% of their portfolio. If someone wants to gamble, feel free to do so, but be warned about the risks.

 

[trip1ex]

I bought at $10/share pre-splits. Still have some and made lots of money on it selling here and there over the years. I remember being happy I made 3x my money in few years. lol. Then being really happy when I was 13x up and 20x up. But if I would have hung on to entire initial investment until now!?!?!?!? I could kick myself.

But couldn't have imagined and way easier said than done. I bought pre-iPod even. I just liked the company and what was different compared to Apple almost going under in the 90s was that they had cash in the bank when I bought. And the internet bubble was crashing at the time and taking companies like Apple with it. This was a company I said to myself that makes nice products and now has the cash in the bank to not go under anytime soon and they can really come thru with something. But worst case they aren't going under like these no profit internet companies. I liked where they sat. Couldn't have predicted the Apple of today, but man.

 

[Glideslope]

Yeah. As a 6 series owner I didn't find the 7 compelling enough to upgrade.... There's a huge glut of people who are in "upgrade mode" and if this new iPhone is even close to what it's hyped to be Apple is going to make a ton of money.

It's quite a bit larger that a "Glut." Watch your AAPL closely as we get closer to the date. Be ready to move quickly.

 

[Carnegie]

Consider this:

Mike Markkula, the first major investor in Apple (I'm not counting Steve Jobs or Steve Wozniak or Ronald Wayne), bought 260,000 shares in Apple for 35 cents a share in 1977. He obviously didn't hold all of those shares through today. But, adjusting for splits, they'd be worth more than $258,000 a share. (They've split 7 times for an aggregate effect of 1,792-for-1.) That would represent a return of nearly 74 million percent - nearly 738,000 times the initial investment. (He also facilitated a loan for the company when he made the initial investment.)

When Apple (Computer) began trading publicly about 3 years after Mr. Markkula's initial investment, those shares were (adjusting for splits) worth $920 after the first day of trading. So their value had already grown to more than 2,600 times their original value.

 

[Johnny907]

Why? I'm an AAPL holder so this is great and all, but what has Apple done to deserve this price bump? Anytime the market jumps for no discernible reason, I get nervous. Right now, I'm as nervous as a cat with two tails in a room full of rocking chairs.

 

[9081094]

Well... look at this way... if shares go down, Apple can release a new mac pro and that is it! confidence gained again.

Apple's games is that... they are making money, their plan is not computers or innovation but make money, they do not care about your wants or needs, they want you to buy their stuff.

So... why do they have to come up with a new iMac or Mac pro if they are doing well? why burning those ships? Those are cards they have when things go bad. They already reached their goal into be such huge company.

Ugh, how ugly the Apple world has become. It's exactly this attitude what will be the downfall of Apple, mark my words. Money first, products later and keep milking those cows.

 

[IJ Reilly]

Consider this:

Mike Markkula, the first major investor in Apple (I'm not counting Steve Jobs or Steve Wozniak or Ronald Wayne), bought 260,000 shares in Apple for 35 cents a share in 1977. He obviously didn't hold all of those shares through today. But, adjusting for splits, they'd be worth more than $258,000 a share. (They've split 7 times for an aggregate effect of 1,792-for-1.) That would represent a return of nearly 74 million percent - nearly 738,000 times the initial investment. (He also facilitated a loan for the company when he made the initial investment.)

When Apple (Computer) began trading publicly about 3 years after Mr. Markkula's initial investment, those shares were (adjusting for splits) worth $920 after the first day of trading. So their value had already grown to more than 2,600 times their original value.

Where you getting your numbers? In the history of the stock, it has split a total of 56:1 (7-1, 2-1, 2-1, 2-1). Not that what Markkula (or anybody else) paid for their shares has any bearing on what they are worth today.

 

[9081094]

Why? I'm an AAPL holder so this is great and all, but what has Apple done to deserve this price bump? Anytime the market jumps for no discernible reason, I get nervous. Right now, I'm as nervous as a cat with two tails in a room full of rocking chairs.

im happy for all the investors that the shares are climbing. But from a customer point of few they deserve a nose dive.

 

[Pootie Tang]

Why? I'm an AAPL holder so this is great and all, but what has Apple done to deserve this price bump? Anytime the market jumps for no discernible reason, I get nervous. Right now, I'm as nervous as a cat with two tails in a room full of rocking chairs.

Perhaps you missed the last quarterly report from Apple:
Revenue of $78.351bn, up 3.3 percent on the $75.872 revenue recorded in the same quarter a year ago
Net income (profit) of $17.891bn, down 2.6 percent on $18.361bn in Q1 2016
Gross margin of 38.5 percent, down from 40.1 percent in Q1 2016
Earnings per diluted share of $3.36, up 2.4 percent on $3.28 in Q1 2016
International sales accounted for 64 percent of the quarter's revenue
Apple's board of directors declared a cash dividend of $0.57 per share of the Company's common stock.

"We're thrilled to report that our holiday quarter results generated Apple's highest quarterly revenue ever, and broke multiple records along the way. We sold more iPhones than ever before and set all-time revenue records for iPhone, Services, Mac and Apple Watch," --Tim Cook, CEO.

"Our outstanding business performance resulted in a new all-time record for earnings per share, and over $27 billion in operating cash flow," --Luca Maestri, Apple's CFO.
------
With a market capitalization of $754 billion, if Apple was a nation, it would rank 18th in Gross Domestic Product, nearly tied with Turkey and ahead of Switzerland.

 

[Carnegie]

Where you getting your numbers? In the history of the stock, it has split a total of 56:1 (7-1, 2-1, 2-1, 2-1). Not that what Markkula (or anybody else) paid for their shares has any bearing on what they are worth today.

Apple's stock has split 56:1 since its IPO. It had already split 32:1 (with 3 separate splits) before that IPO.

As for where I got my numbers, they're from the prospectus that Apple issued when it went public. (Obviously some numbers - e.g., the current stock price and those relating to post-IPO splits - are from other sources.)

 

[Pootie Tang]

im happy for all the investors that the shares are climbing. But from a customer point of few they deserve a nose dive.

Investors are also customers. If the products weren't selling, the stock would be tanking. People seem to be buying Apple services, phones and watches at a record pace.
"Apple now makes more revenue from its services than it does from selling Macs. Revenue from services like iTunes, the App Store, Apple Pay, other internet services, and licensing has increased 20 percent year-over year. It's a shift that means Apple can now generate a steady stream of revenue from existing devices that are accessing its internet-based services that the company controls."

 

[IJ Reilly]

Apple's stock has split 56:1 since its IPO. It had already split 32:1 (with 3 separate splits) before that IPO.

As for where I got my numbers, they're from the prospectus that Apple issued when it went public. (Obviously some numbers - e.g., the current stock price and those relating to post-IPO splits - are from other sources.)

Pre-IPO. I see. That's a really small club. Of course Markkula was one of the first if not the first to put up any cash for the Steves.

 

[9081094]

Investors are also customers. If the products weren't selling, the stock would be tanking. People seem to be buying Apple services, phones and watches at a record pace.
"Apple now makes more revenue from its services than it does from selling Macs. Revenue from services like iTunes, the App Store, Apple Pay, other internet services, and licensing has increased 20 percent year-over year. It's a shift that means Apple can now generate a steady stream of revenue from existing devices that are accessing its internet-based services that the company controls."

In that case should investors be very worried. Samsung just launched the gold standard in phones. So apple's biggest cash cow is under threat. As for the Macs and eco system... I'm so close stepping out of it. Overpriced and under delivering and not listening to their customers is forcing Mac users to look elsewhere.