anyone getting in apple as the stock is plummeting. earnings come out tmrw, tues, and i think with inflated expectations the stock will fall. Might be the move to get in after earnings report tues
To remove first post, remove entire topic.
anyone getting in apple as the stock is plummeting. earnings come out tmrw, tues, and i think with inflated expectations the stock will fall. Might be the move to get in after earnings report tues
not sure what to make of apple...increased competition, margins going down, no solid new products in the pipeline. I guess one could make the argument that is a good value buy but tough call
not sure what to make of apple...increased competition, margins going down, no solid new products in the pipeline. I guess one could make the argument that is a good value buy but tough call
This stock will go under 100 long term..margins will compress and sales will slow.
Every stock in history moves from growth to maturity, AAPL will be no different.
Outside of a large, significant market correction, I think we might have seen the bottom on AAPL. To ever trade below $100 a share nominally, this would need to split at least 3:1
You wouldn't get an argument from me that every stock in history eventually moved from growth to maturity, but what you are not considering is that not many growth stocks like AAPL were priced at a P/E of about 16 in the middle of its growth phase at the peak of its market cap. The stocks you are remembering that lost 85-90% of their value were the ones trading at ridiculous valuations to begin with.
These days, everyone wants to compare AAPL to Microsoft. Looking back at Microsoft, on a split adjusted basis, peak to valley, it saw approximately a 63% decline. Applying the same 63% decline to AAPL's peak of 705, that would take you to about $265. However, MSFT was trading at a P/E of about 70-80 at its peak, huge difference between that and a P/E of 16. AAPL was already priced as if it was a non-growth, mature company. It will never even see $265 (ignoring stock splits) let alone $100.
Right now, it is trading at about 10-11 times earnings. There is a lot of room for declining margins, and slowing growth, already priced in. The only reason it fell so quickly these past 9 months or so was because its market cap was too large to support that quick of a movement up it saw the 9 months before that. Every fund under the sun was overexposed to AAPL on the run up (even dividend funds were relying too heavily on it). As it started declining, funds that should never have been that exposed dumped, and the cycle perpetuated. There is only so much investable capital to go around, and in about a 9 month timeframe, AAPL's market cap increased by about $250-$300 billion. That increase alone would rank as one of the largest companies in the world, and that was just new investing capital generated in just 9 months, not even including the investor base that existed prior to that market cap generation. That sort of growth in investor capital is just not sustainable.
What you see now is a company that is appropriately valued for what it is, a company that is no longer a growth story, and may not be the same innovative company it was in the past. But, it is currently priced at a similar valuation to Microsoft. So, you've basically got the built in upside of the Company coming out with something unique that brings them back to the forefront for free, with the fall back of the valuation of a Microsoft. Not sure I see a lot of downside here, and definitely not the potential 80% downside you were alluding to.
Quote Originally Posted by wallstreetcappers:
This stock will go under 100 long term..margins will compress and sales will slow.
Every stock in history moves from growth to maturity, AAPL will be no different.
Outside of a large, significant market correction, I think we might have seen the bottom on AAPL. To ever trade below $100 a share nominally, this would need to split at least 3:1
You wouldn't get an argument from me that every stock in history eventually moved from growth to maturity, but what you are not considering is that not many growth stocks like AAPL were priced at a P/E of about 16 in the middle of its growth phase at the peak of its market cap. The stocks you are remembering that lost 85-90% of their value were the ones trading at ridiculous valuations to begin with.
These days, everyone wants to compare AAPL to Microsoft. Looking back at Microsoft, on a split adjusted basis, peak to valley, it saw approximately a 63% decline. Applying the same 63% decline to AAPL's peak of 705, that would take you to about $265. However, MSFT was trading at a P/E of about 70-80 at its peak, huge difference between that and a P/E of 16. AAPL was already priced as if it was a non-growth, mature company. It will never even see $265 (ignoring stock splits) let alone $100.
Right now, it is trading at about 10-11 times earnings. There is a lot of room for declining margins, and slowing growth, already priced in. The only reason it fell so quickly these past 9 months or so was because its market cap was too large to support that quick of a movement up it saw the 9 months before that. Every fund under the sun was overexposed to AAPL on the run up (even dividend funds were relying too heavily on it). As it started declining, funds that should never have been that exposed dumped, and the cycle perpetuated. There is only so much investable capital to go around, and in about a 9 month timeframe, AAPL's market cap increased by about $250-$300 billion. That increase alone would rank as one of the largest companies in the world, and that was just new investing capital generated in just 9 months, not even including the investor base that existed prior to that market cap generation. That sort of growth in investor capital is just not sustainable.
What you see now is a company that is appropriately valued for what it is, a company that is no longer a growth story, and may not be the same innovative company it was in the past. But, it is currently priced at a similar valuation to Microsoft. So, you've basically got the built in upside of the Company coming out with something unique that brings them back to the forefront for free, with the fall back of the valuation of a Microsoft. Not sure I see a lot of downside here, and definitely not the potential 80% downside you were alluding to.
I have no doubt in my mind AAPL will go to 100, not tomorrow and not this year but I am positive it will.
I think their sales will slow faster that MSFT did, their margins will decline steeper and stronger. Microsoft still has market monopoly for their product, AAPL will not carry that ability.
I would compare AAPL more to Cisco than Microsoft, and actually neither because I think the products Cisco and MSFT have will be shown to fare better than AAPL will. Cisco was smart and purchased SFA which helped them jump into a higher margin segment..AAPL wont be able to hop to other business segments, they are far less diverse and much more narrow product wise.
The only hope AAPL has from a massive margin collapse is if they somehow find the next great thing..and nothing coming from the company from a technology perspective makes me think they are innovators anymore..they are being caught and passed and that is the larger issue to me.
I would say a better comparison would be Blackberry..meaning the peak to trough fall since they are much more similar than AAPL is to MSFT.
What is shocking to me, think of what the demise would be if AAPL werent using slave labor to suck up all those profits for the last few years???
wake,
I have no doubt in my mind AAPL will go to 100, not tomorrow and not this year but I am positive it will.
I think their sales will slow faster that MSFT did, their margins will decline steeper and stronger. Microsoft still has market monopoly for their product, AAPL will not carry that ability.
I would compare AAPL more to Cisco than Microsoft, and actually neither because I think the products Cisco and MSFT have will be shown to fare better than AAPL will. Cisco was smart and purchased SFA which helped them jump into a higher margin segment..AAPL wont be able to hop to other business segments, they are far less diverse and much more narrow product wise.
The only hope AAPL has from a massive margin collapse is if they somehow find the next great thing..and nothing coming from the company from a technology perspective makes me think they are innovators anymore..they are being caught and passed and that is the larger issue to me.
I would say a better comparison would be Blackberry..meaning the peak to trough fall since they are much more similar than AAPL is to MSFT.
What is shocking to me, think of what the demise would be if AAPL werent using slave labor to suck up all those profits for the last few years???
I would say a better comparison would be Blackberry..meaning the peak to trough fall since they are much more similar than AAPL is to MSFT.
Wall,
I don't disagree with a lot you are saying, but you are completely ignoring valuation in your analysis. BBRY (or RIMM back then) was trading at a P/E close to 50 at its peak, a solid three times higher valuation than AAPL. And that is forgetting the cash/investments AAPL has, which is well over $100 billion (and alone, worth more than $100 a share). Backing that out, its valuation was even lower.
Company-wise, possibly even moat-wise, I'd agree, AAPL may be a bit closer to BBRY than MSFT, but valuation-wise, it isn't close to either when comparing peaks. If AAPL was trading at a P/E of 50 at the height of its valuation, maybe you see a similar decline you saw with BBRY in a worst case scenario if they never develop another innovative product. When it was around 15 or 16 at $700 a share, with over $100 per share just in cash/investments, no way you see that significant of a decline.
Growth has been slowing, margins are declining, but it is still a cash flow generating machine. Despite the slowing business, they are still generating a ton of cash (i.e., the earnings are strong, not just accounting gains).
We've discussed a few different companies in the past, I know our strategies/methodologies are different, but plenty of investors can see value in a Company that may not grow at 20% a year, and its margins might be coming back down to earth a bit. I know you have disdain for the Company (and its "slave" labor), and I know you prefer companies in growth stages, but come on, AAPL below $100 a share (heck, even below $300 a share), is just plain silly
Quote Originally Posted by wallstreetcappers:
wake,
I would say a better comparison would be Blackberry..meaning the peak to trough fall since they are much more similar than AAPL is to MSFT.
Wall,
I don't disagree with a lot you are saying, but you are completely ignoring valuation in your analysis. BBRY (or RIMM back then) was trading at a P/E close to 50 at its peak, a solid three times higher valuation than AAPL. And that is forgetting the cash/investments AAPL has, which is well over $100 billion (and alone, worth more than $100 a share). Backing that out, its valuation was even lower.
Company-wise, possibly even moat-wise, I'd agree, AAPL may be a bit closer to BBRY than MSFT, but valuation-wise, it isn't close to either when comparing peaks. If AAPL was trading at a P/E of 50 at the height of its valuation, maybe you see a similar decline you saw with BBRY in a worst case scenario if they never develop another innovative product. When it was around 15 or 16 at $700 a share, with over $100 per share just in cash/investments, no way you see that significant of a decline.
Growth has been slowing, margins are declining, but it is still a cash flow generating machine. Despite the slowing business, they are still generating a ton of cash (i.e., the earnings are strong, not just accounting gains).
We've discussed a few different companies in the past, I know our strategies/methodologies are different, but plenty of investors can see value in a Company that may not grow at 20% a year, and its margins might be coming back down to earth a bit. I know you have disdain for the Company (and its "slave" labor), and I know you prefer companies in growth stages, but come on, AAPL below $100 a share (heck, even below $300 a share), is just plain silly
Cash on the balance sheet does not mean much of anything with regard to PE ratios.
Also, they are now starting to play the debt game versus funding share buybacks and dividends from cash flow.
I am only looking at earnings, margins and growth with this company, there arent many people who buy a stock because the company has cash or owns investments in their portfolio. Cash and investments do not equate to revenue growth.
I see a company who is struggling for what is next and worried about their image..I dont see the same fearless AAPL that was with Steve Jobs and I think they have crossed the point of no return as to their growth and revenue acceleration.
I am not shocked about this, the market will do that to a cocky company like this. I really dislike the way Jobs made billions off the back of slave labor and I hope the government slaps APPL around for offshoring their cash. I am thrilled that a company like this is going down, and aside from my views on their revenues it couldnt happen to a more deserving company.
Well I guess Nike and Monsanto are in front of AAPL as to companies that I would love to see go under.
wake,
Cash on the balance sheet does not mean much of anything with regard to PE ratios.
Also, they are now starting to play the debt game versus funding share buybacks and dividends from cash flow.
I am only looking at earnings, margins and growth with this company, there arent many people who buy a stock because the company has cash or owns investments in their portfolio. Cash and investments do not equate to revenue growth.
I see a company who is struggling for what is next and worried about their image..I dont see the same fearless AAPL that was with Steve Jobs and I think they have crossed the point of no return as to their growth and revenue acceleration.
I am not shocked about this, the market will do that to a cocky company like this. I really dislike the way Jobs made billions off the back of slave labor and I hope the government slaps APPL around for offshoring their cash. I am thrilled that a company like this is going down, and aside from my views on their revenues it couldnt happen to a more deserving company.
Well I guess Nike and Monsanto are in front of AAPL as to companies that I would love to see go under.
This is a really good discussion with great points by both Wake & Wall..
APPL never traded at absurd valuations as Wake pointed out, and all companies go thru growth , valuation phases as Wall mentioned.
The thing that makes APPL unique from MSFT is that one is primarily a Hardware company, while one is primarily a Software company. MSFT was able to enjoy riches due to a monopoly that existed on virtually all desktop computurs for decades... APPL enjoys no such luxury as a Hardware company, and is dealing with Samsung front and center. This is an important point that bears repeating... AAPL is primarily a hardware company, and depends on finicky tastes of consumers to propel its growth.. Companies like MSFT and GOOG are "soft" monopolies, and better protected from competition.
That being said, APPL has a warchest of cash at its disposal , and could choose an acquisition to propel its growth. To me, this would be a wise choice since its pipeline seems weak, and I am concerned about the lack of ingenuity at this company since the loss of Steve Jobs.
This is a really good discussion with great points by both Wake & Wall..
APPL never traded at absurd valuations as Wake pointed out, and all companies go thru growth , valuation phases as Wall mentioned.
The thing that makes APPL unique from MSFT is that one is primarily a Hardware company, while one is primarily a Software company. MSFT was able to enjoy riches due to a monopoly that existed on virtually all desktop computurs for decades... APPL enjoys no such luxury as a Hardware company, and is dealing with Samsung front and center. This is an important point that bears repeating... AAPL is primarily a hardware company, and depends on finicky tastes of consumers to propel its growth.. Companies like MSFT and GOOG are "soft" monopolies, and better protected from competition.
That being said, APPL has a warchest of cash at its disposal , and could choose an acquisition to propel its growth. To me, this would be a wise choice since its pipeline seems weak, and I am concerned about the lack of ingenuity at this company since the loss of Steve Jobs.
This is a really good discussion with great points by both Wake & Wall..
APPL never traded at absurd valuations as Wake pointed out, and all companies go thru growth , valuation phases as Wall mentioned.
The thing that makes APPL unique from MSFT is that one is primarily a Hardware company, while one is primarily a Software company. MSFT was able to enjoy riches due to a monopoly that existed on virtually all desktop computurs for decades... APPL enjoys no such luxury as a Hardware company, and is dealing with Samsung front and center. This is an important point that bears repeating... AAPL is primarily a hardware company, and depends on finicky tastes of consumers to propel its growth.. Companies like MSFT and GOOG are "soft" monopolies, and better protected from competition.
That being said, APPL has a warchest of cash at its disposal , and could choose an acquisition to propel its growth. To me, this would be a wise choice since its pipeline seems weak, and I am concerned about the lack of ingenuity at this company since the loss of Steve Jobs.
Ingenuity is the key word. Wall street wants potential growth & without Steve Jobs genius of innovative products-that previous ever present potential growth for APPL is definitely restricted. The pipeline of old is not the pipeline of new without Steve Jobs. Apple is not done, but without Jobs-the golden days of Apple are over.
Quote Originally Posted by Rush51:
This is a really good discussion with great points by both Wake & Wall..
APPL never traded at absurd valuations as Wake pointed out, and all companies go thru growth , valuation phases as Wall mentioned.
The thing that makes APPL unique from MSFT is that one is primarily a Hardware company, while one is primarily a Software company. MSFT was able to enjoy riches due to a monopoly that existed on virtually all desktop computurs for decades... APPL enjoys no such luxury as a Hardware company, and is dealing with Samsung front and center. This is an important point that bears repeating... AAPL is primarily a hardware company, and depends on finicky tastes of consumers to propel its growth.. Companies like MSFT and GOOG are "soft" monopolies, and better protected from competition.
That being said, APPL has a warchest of cash at its disposal , and could choose an acquisition to propel its growth. To me, this would be a wise choice since its pipeline seems weak, and I am concerned about the lack of ingenuity at this company since the loss of Steve Jobs.
Ingenuity is the key word. Wall street wants potential growth & without Steve Jobs genius of innovative products-that previous ever present potential growth for APPL is definitely restricted. The pipeline of old is not the pipeline of new without Steve Jobs. Apple is not done, but without Jobs-the golden days of Apple are over.
its all about foresight, apple was the bomb back in 02... sorta like the term the bomb.
in 02 they released the ipod, i bought mine used for 250, resold it for 320. meaning i made a 70 dollar profit on a used item.
if i bought 250$ of the stock i woulda made 6000% (if i held today). instead i made a 70$ profit. lol.
gotta love the quick buck.
if u have foresight that is what matters, guys like elon musk have unlimited foresight... the key is innovation. steve knew about the iphone, and yes i stood in line for 2 iphones bought them for 599 each flip'd em. later got 100 or w/e dollar rebate that steve jobs gave back.
if i bought the stock instead when that iphone came out i woulda made more bank.
if you think apple will make a nice watch sure i will buy it, why? because i understand technology, and no it wont be the watch you are thinking, because u dont have foresight do you?
if someone designs a nice watch, it will be the biggest game changer in the watch industry.
its all about foresight, apple was the bomb back in 02... sorta like the term the bomb.
in 02 they released the ipod, i bought mine used for 250, resold it for 320. meaning i made a 70 dollar profit on a used item.
if i bought 250$ of the stock i woulda made 6000% (if i held today). instead i made a 70$ profit. lol.
gotta love the quick buck.
if u have foresight that is what matters, guys like elon musk have unlimited foresight... the key is innovation. steve knew about the iphone, and yes i stood in line for 2 iphones bought them for 599 each flip'd em. later got 100 or w/e dollar rebate that steve jobs gave back.
if i bought the stock instead when that iphone came out i woulda made more bank.
if you think apple will make a nice watch sure i will buy it, why? because i understand technology, and no it wont be the watch you are thinking, because u dont have foresight do you?
if someone designs a nice watch, it will be the biggest game changer in the watch industry.
This is a really good discussion with great points by both Wake & Wall..
APPL never traded at absurd valuations as Wake pointed out, and all companies go thru growth , valuation phases as Wall mentioned.
Appreciate the comment, I've had a few good discussions with Wall on stocks. Based on the positions we've taken on companies, it seems like we have two completed different methodologies, and I enjoy it because he provides a perspective I sometimes miss as I'm much more focused on earnings related valuations (and I hope I do as well for him as he seems to focus more on growth potential).
Nothing is absolute, despite my thoughts, AAPL could go below $100, or despite what Wall thinks, it may never get close to that and $450 will look like a huge bargain a year from now. If we could say for 100% certainty what will happen to any company, we'd all be millionaires. Its all educated guesses, and its good to have as many perspectives as possible when making investing decisions.
I just think if you were able to have 100 companies that were identical to AAPL in every way possible (both company-wise and valuation-wise), more than 50 of those would prove to be good investments. Might it not work out in the case of AAPL, sure, but I like the odds. At its current valuation, it almost needs a perfect storm of bad luck to fall significantly further (as opposed to companies with valuations through the roof that almost need the perfect storm of positives to keep up the valuations (i.e, year after year of increased growth). It is being valued like it has completely lost its edge (which it may have), but that is valued in. Any sort of revolutionary product, or earnings surprise down the road, and it takes off. In fact, all it took was a quarter that was not terrible, and the stock is already up about 15% off the low. And there hasn't even been any real strong catalyst, or good news that really should have driven any upward momentum.
It currently represents the largest holding in my portfolio as I made a pretty large purchase in the low 430's, and I'm happy so far. I do think a year from now, anyone who didn't buy while it was in the 400's will be kicking themselves, but we'll see.
Quote Originally Posted by Rush51:
This is a really good discussion with great points by both Wake & Wall..
APPL never traded at absurd valuations as Wake pointed out, and all companies go thru growth , valuation phases as Wall mentioned.
Appreciate the comment, I've had a few good discussions with Wall on stocks. Based on the positions we've taken on companies, it seems like we have two completed different methodologies, and I enjoy it because he provides a perspective I sometimes miss as I'm much more focused on earnings related valuations (and I hope I do as well for him as he seems to focus more on growth potential).
Nothing is absolute, despite my thoughts, AAPL could go below $100, or despite what Wall thinks, it may never get close to that and $450 will look like a huge bargain a year from now. If we could say for 100% certainty what will happen to any company, we'd all be millionaires. Its all educated guesses, and its good to have as many perspectives as possible when making investing decisions.
I just think if you were able to have 100 companies that were identical to AAPL in every way possible (both company-wise and valuation-wise), more than 50 of those would prove to be good investments. Might it not work out in the case of AAPL, sure, but I like the odds. At its current valuation, it almost needs a perfect storm of bad luck to fall significantly further (as opposed to companies with valuations through the roof that almost need the perfect storm of positives to keep up the valuations (i.e, year after year of increased growth). It is being valued like it has completely lost its edge (which it may have), but that is valued in. Any sort of revolutionary product, or earnings surprise down the road, and it takes off. In fact, all it took was a quarter that was not terrible, and the stock is already up about 15% off the low. And there hasn't even been any real strong catalyst, or good news that really should have driven any upward momentum.
It currently represents the largest holding in my portfolio as I made a pretty large purchase in the low 430's, and I'm happy so far. I do think a year from now, anyone who didn't buy while it was in the 400's will be kicking themselves, but we'll see.
Hot Forum Topics
