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Apple stock heading to $1,650, fund manager predicts (with video)

Wednesday, March 28, 2012 · 5:32 pm · 35 Comments

Apple’s share price hit the $600 market for the first time ahead of the mid-March release of the new iPad.

It closed above $500 for the first time on Feb. 13, and just before Christmas, on Dec. 23, it closed above the $400 mark for the first time.

But could shares of Apple hit $1,650?

Eric Jackson, founder of hedge fund IronFire Capital, thinks so. He told CNBC Wednesday that the price could hit that level by the end of 2015.

Visit msnbc.com for breaking news, world news, and news about the economy

Source: CNBC

Categories: News

Tags: aapl, Apple stock, Eric Jackson, finance, IronFire Capital

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Comment Feed

35 Comments

Bob

Wednesday, March 28, 2012 - 5:37 pm · Reply

And my wife said we had enough Apple stock when it was at $80.
Alex

Wednesday, March 28, 2012 - 5:52 pm · Reply

$1,650 per share would mean that Apple would be valued at $1.5 trillion dollars. This is more that 10% of the total GDP of United States. It three times more that economy of Saudi Arabia. I have been Apple investor since 1999 but even i say it is completely unrealistic, UNLESS we are talking about hyperinflation and $1,650 in 2 years is more like $750 – $800 in today’s money.
- el Tritoma
  
  Wednesday, March 28, 2012 - 6:12 pm · Reply
  
  that is true, but apple has sales all over the world and right now the majority, i believe, comes from outside the u.s. so if in two years 2/3rds of apple’s sales are from outside the u.s. then the share price would be about 3% of the u.s. gdp, which isn’t that much different from what it is today esp. taking inflation into account. and i have been invested since ’97 so i share some of your skepticism!
  - Alex
    
    Wednesday, March 28, 2012 - 8:07 pm · Reply
    
    Yeah, I know but I am still concerned. I do believe the Apple will continue making best products but there is simply a limit on the addressable market. Headroom for growth has a limited that is outside of Apple control. Let’s take iPhone for example. There is about 800 million people who could afford smartphone at the iPhone’s price range. Let’s say Apple will get 50% of this market, so we are talking about 400 million customers. Phone is replaced every 2.5 years on average, so we are talking about 150 million customers a year. Maybe 200 million. So there is an upper limit on the iPhone growth. S
    - MikeK
      
      Wednesday, March 28, 2012 - 8:31 pm · Reply
      
      Are you forgetting that the iPhone 3gs is still available? for FREE.
      Are you forgetting Apple hasn’t even begun to crack the Chinese market?
      
      Are you forgetting that the Mac has less than 10% marketshare worldwide?
      
      Are you forgetting that the iPad is the new PC?
      - Alex
        
        Wednesday, March 28, 2012 - 8:59 pm · Reply
        
        You’ve listed some the reasons why i was and am an Apple investor, but to be a devil’s advocate here:
        - 3Gs is available for free with the subsidy. Internationally people usually use prepay option. 3Gs is not going to be free there.
        - China is a separate discussion all together. Apple is hugely popular there but important to keep in mind that the addressable market there who could actually AFFORD to buy an apple product is only a fraction of the total. Samsung is beating Apple 3 to 1 for a reason there. They can’t afford to buy better but more expensive products and settle on an inferior alternative.
        
        Have nothing to add on your # 3 and #4. Mac and iPad should drive a lot of growth.
- KenC
  
  Wednesday, March 28, 2012 - 6:22 pm · Reply
  
  Comparing a company’s value to a countries annual GDP is nonsense.
  
  I didn’t listen to his interview, but $1650 by the end of 2015, is 3 years 9 months from now. Getting there will take Apple firing on all cylinders, but it’s not out of the realm of possibility, given what Apple has already done.
  
  Eyeballing the numbers, it looks to me that he has Apple’s shares growing 30% a year to get to $1650. Would you have batted an eye if he had said he thinks Apple’s shares can go up 30% a year for the next 3 years and 9 months?
  - pablorph
    
    Wednesday, March 28, 2012 - 6:27 pm · Reply
    
    Or, what about $165.00 per share.
    
    After a 10 to1 stock split.
    
    People get so caught up in the “big” numbers and forget that has very little actual relevance to what a company is truly worth.
  - Ballmer's left nut
    
    Wednesday, March 28, 2012 - 8:06 pm · Reply
    
    The valuation of shares cannot be detached from the value of a country’s GDP because that is a measure of a country’s annual output and by definition per capita income. In order to purchase more Apple products per capita income and therefore a country’s total national output has to keep pace.
    
    Once Apple reaches saturation point either with respect to income growth or market penetration, sales will plateau. When this happens the underlying stock price will remain static or flatlined.
    
    Apple hasn’t reached this point yet but to speculate on continuous 30% share price growth on an already large base is clearly unsupported by the facts. In the history of the stock market no company has grown beyond $1 trillion no matter how bright its prospects were.
- Bluejay
  
  Wednesday, March 28, 2012 - 6:27 pm · Reply
  
  1.5 trillion is unrealistic and 600 Billion is super realistic??
  - Alex
    
    Wednesday, March 28, 2012 - 8:00 pm · Reply
    
    There is a big difference in 1.5 trillion and 600 Billion. I was expecting AAPL to get to 600 Billion by the end of 2012 and 750 Billion by the end of 2013 but 1.5 trillion is simply unachievable.
    - kingmel
      
      Wednesday, March 28, 2012 - 11:16 pm · Reply
      
      $1.5T is certainly a big market capitalization number. But simply unachievable? No. It may not be Apple that hits that figure and it may not happen soon, but inflation will gradually make $1.5T not quite so lofty a valuation.
- blaargh
  
  Wednesday, March 28, 2012 - 6:31 pm · Reply
  
  You’re falling into the trap of “the law of large numbers”. AAPL compared to the US GDP is a completely meaningless comparison. Apple sells very profitable computers throughout the entire planet. Barring any gigantic shifts in world order, world calamities, or major f-ups on AAPL’s part, they will hit $1650. I won’t put a date on it though… I leave that to the so called “experts” that I ignore all the way to the bank…
  - blaargh
    
    Wednesday, March 28, 2012 - 6:35 pm · Reply
    
    Ah, and KenC beat me to it. Always love your financial voice of reason here Ken…
    - Johnny Appleseed
      
      Wednesday, March 28, 2012 - 8:03 pm · Reply
      
      The only law of large numbers is that Apple’s sales can’t keep growing 100% YOY forever. And they already have most of the mobile industry profits, so they have to rely on the market itself to grow. Luckily, it will.
Michael

Wednesday, March 28, 2012 - 6:09 pm · Reply

I am more concerned about how he said Apple would hit $500 before $700, that would be a $120 drop and would probably wipe most of us out. I see them making more than $50 a share this year with over $120 billion in cash at year end. So it is currently trading at 10x current earnings x cash and growing at 80%. How come AMZN can trade at 146x earnings and has margins in the single digits but it keeps going up.
- el Tritoma
  
  Wednesday, March 28, 2012 - 6:14 pm · Reply
  
  you get some kind of major award if you can answer the amazon question. i think they are about as amzn as the mets were!
  - Nerd Beautiful
    
    Wednesday, March 28, 2012 - 11:20 pm · Reply
    
    Zero real competition …
BMWTwisty

Wednesday, March 28, 2012 - 6:17 pm · Reply

Yeah, yeah, yeah, and Steve Cortez sez it’s overvalued and due for a sellloff, and Google’s a smarter buy, blah, blah, blah…
- KenC
  
  Wednesday, March 28, 2012 - 6:23 pm · Reply
  
  I love how Cortes got asked about his short on Apple today, and he said he still had it, but that it was paired with a Google long trade, so that he’s okay with it, since his Google long has been making up for his loss on his Apple short. What a numb nut.
Steve Carl

Wednesday, March 28, 2012 - 6:18 pm · Reply

AAPL has been averaging an increase of $100 per year. That means by the end of 2015 we should see AAPL at about $1000. $1650 is a little strong, unless something stunning happens – like Apple TV?
Vatdoro

Wednesday, March 28, 2012 - 7:03 pm · Reply

The crazy thing is $1,650 isn’t that crazy. It’s just hard to get our minds around a company that big, but Apple is definitely on that trajectory.

In December 2009 AAPL was $90, but had been as high as $200. If anyone at the time had said the price would be over $600 in early 2012 they would have been considered crazier than this guy.

The fact is the stock has been growing at an average of 60% per year for the last 5 years. And during that time the revenue and profits have had exponential growth. All indicators show that exponential growth should continue for the next few years at least. If we are extremely pessimistic and assume the stock growth is cut in half, say 30% growth per year, AAPL will be at $1,762 in March 2016.

I believe that stock price is extremely conservative. If the stock price growth slows down to 50% per year AAPL will be $3,123 in March 2016. Now that jus sounds insane, but with Apple’s exponential revenue and profit growth it’s not only possible, but likely.

$AAPL is insane!
- Alex
  
  Wednesday, March 28, 2012 - 8:19 pm · Reply
  
  Well, I was saying back in 2009 that Apple will hit $500 in three years based on the iPhone momentum/other new products. I have put literally all my savings in Apple and went all in on the margin and i had a really good run. But i do not think Apple will hit $1,650. Again, not because of Apple but because of the market limitations. Apple would have to franchise aggressively into other consumer product markets and repeat what they have done to phone and music industry to get to 1.5 trillion market cap. They could do that but without Steve it would be much, much harder.
SuperKmart

Wednesday, March 28, 2012 - 7:32 pm · Reply

From your lips to Gods ears. May the stock go to 10,000 a share. Now if the value of my dollar would stop dropping I might be about even where I was in 2000. I’m all for the stock going north and staying as high as possible. What other stock is performing like this. Wall Street must be embarrassed they have done everything to bash this stock and still it rises. Its glad to see a Apple doing so well and the number one computer manufacturer in the world, largest company, biggest pay donut shaped building biggest data center, biggest wallet etc etc.
- James
  
  Wednesday, March 28, 2012 - 9:18 pm · Reply
  
  I agree with you. I have been worried because my original *small* investment in Appl has now ballooned to about 65% of my retirement account. I keep thinking about paring some of it back, because I worry about keeping so much in one basket. But I keep drawing a blank on where better to put it. Appl is the only reason my retirement has increased, the last three years.
John

Wednesday, March 28, 2012 - 7:33 pm · Reply

$1,000 in 45 months is just over $22 a month in stock price appreciation. When you look at it that way it doesn’t seem so difficult.

There are almost 7 billion people on the planet and although many are quite poor many have the means to get a smart phone. Many countries have skipped building out phone lines and are going directly to cell phone coverage. I’ll guess that 2 or 3 billion people will be in the market for a smart phone soon. Apple sold under 100 million iPhones last year (approximately). That means that in spite of their size they have enormous room to grow.
john

Wednesday, March 28, 2012 - 8:20 pm · Reply

And they are only 10% of total PC sales.. If windows 8 bombs, I see all of these hipster kids who grew up on macs, and cannot even use a PC, or want to, insisting on Macs at work. A huge worldwide market. I have 15 Macs at my office and could never imagine using a PC. Then, what keeps Apple from developing more must-have products. TV, Seri Search, Gaming, their own connect signal to the internet? it’s all about keeping their fans happy. At the mall last Sunday, the SONY store had 6 people in it including clerks. Verizon had 8, T-mobile was a morgue, 0, – the Apple Store, PACKED. I counted over 20 Apple employees on the floor… all busy. so…. Just you have to hope the world economy does not crash from debt.. that’s my worry. On the other hand, imagine Apple in a good economy! Just having fun with this. Good night.
Dan Pallotta

Wednesday, March 28, 2012 - 8:49 pm · Reply

It will happen much faster than that. Apple was at $100 three years ago. It has grown by a factor of six in that time. All it needs to do is triple and it’s at $1,800 a share. And if the iPad becomes as dominant as it appears, and with its still low Mac market share, and if it executes as well as it has been, we are not close to a ceiling here.
Johnny Appleseed

Wednesday, March 28, 2012 - 11:46 pm · Reply

P/E ratios aside, everyone needs to remember that Apple’s stock price is a reflection of expected future growth. It remains to be seen how much of that expected growth is already built in to the price.
- eN
  
  Thursday, March 29, 2012 - 1:27 am · Reply
  
  Apple will continue to mount cash to bolster the company’s value, despite the dividend. In fact, they will probably continue to improve rate of cash growth as well. With cash growth bolstering the core value of the company and a slowly rising dividend to entice new shareholders, Apple could easily hit 1000.
MacBill

Thursday, March 29, 2012 - 7:42 am · Reply

Oh Jesus, here we go again. When will people understand that this scenario is NEVER GOING TO HAPPEN. I am a financial advisor, and this situation simply just won’t happen.
- James
  
  Thursday, March 29, 2012 - 11:36 am · Reply
  
  If I had kept listening to MY financial advisor, I never would have regained the money lost in 2007. Apple is the only reason why my portfolio is going up. I worry about diversification, but it is not like there is anything else to turn to. Given where things stand, it is highly unlikely that Appl will continue a parabolic rise. On the other hand, given the opportunities overseas, (particularly in China), and given the potential for new products and growth in market share, there is no reason why the stock is finished.
  - Vatdoro
    
    Thursday, March 29, 2012 - 11:58 am · Reply
    
    Excellent point. I had a little bit of money in AAPL before 2010, but after the iPad was announced in January 2010, I went all in. 100% of my savings and retirement. No financial advisor in the world would have recommended that. I knew putting all my eggs in one basket was risky, but the stock was so undervalued and the upside was so huge that it seemed like the right decision. (I was still relatively young, 32 in 2010.)
    
    Every time I’ve listened to “financial advisors” they’ve always screwed me. Either sold me crappy investment products, or their investment recommendations under perform the market.
    
    I am SO glad I ignored the conventional wisdom of financial advisors and put everything in AAPL. As a software engineer I feel like I understand the technology market, and I feel like I understand Apple. I believe Warren Buffet once said something like “I don’t invest in technology stocks because I don’t understand technology”. Well, I invest in technology stocks because it is one of the few businesses I understand. And right now I see Apple as the only tech company worth investing in.
    
    I’m keeping my money in AAPL. The stock is still undervalued, and the upsides are still incredibly huge.
- Vatdoro
  
  Thursday, March 29, 2012 - 12:02 pm · Reply
  
  Thanks for your financial advice, but no thanks.
  
  If it weren’t for AAPL my investments/savings would be a fraction of what they are today. I will continue to ignore the advice of “financial advisors” and keep making huge gains with AAPL.
ac9452

Thursday, March 29, 2012 - 9:16 am · Reply

It’s apparent that many of the people chiming in here have not considered that AAPL is still under 10% in computer marketshare. Technically speaking, $1650 per share is totally possible if they start to chip away at that marketshare while maintaining their position in the smartphone and tablet space. In addition, you are also discounting the fact that AAPL may not be done introducing products in other areas… What IF they enter the Consumer electronics space with a Television and/or improved set top box? I think some of you need to think outside the box just a bit before making statements about this being “impossible” to achieve….