Apple shares hit new all-time intraday high

18 Comments

1. doooooomeddddddd…………………no longer inovative……/s

   LOL!!!!

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2. Bubbles eventually find a pin.

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   1. Perhaps pins eventually find bubbles?

      It can be difficult to define financial bubbles except in hindsight. And financial bubbles are not always across the board – they often exist in specific sectors and bleed over to other sectors to greater or lesser degrees as they develop and implode.

      In my opinion, the primary and consistent ingredient in financial bubbles is greed. The largest and most catastrophic bubbles tend to include a strong element of corruption and fraud (see the housing bubble of 2006), and may also be exacerbated by government laws and actions which (unintentionally?) extend the growth phase of the bubble. The U.S. monetary policies in the early to mid-2000s helped to foster the housing bubble, in combination with the international hunger to invest in mortgage-backed securities. When the supply of mortgages became insufficient, the industry found a way to create more despite the risks. And the perceived separation of the risk from the reward achieved through the derivatives market in combination with a web of financial guarantees across the industry with respect to that debt made widespread collapse a virtual certainty.

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      1. Call me conservative – not a conservative – but I see the market as highly inflated and long overdue a correction. My portfolio is mostly hard assets and strong value securities. You fall in love with people, but not investments. The market is no place for fanboys blindly following something without considering fundamentals.

         Tim Cook has taken Apple from a debt free company to a highly indebted one. They have a lot of debt to service and their tax liabilities are in limbo with both the US and EU. Apple is also highly invested in Real Estate which is in a broad bubble in much of the world. Further, Apple’s operating costs have greatly ballooned under his watch and if iPhone sales cool off Apple will be handing out a lot of pink slips very quickly.

         The Apple that created the iPod and iPhone was a much smaller- very much smaller- company than what exists today. Today’s Apple has a lot of junk in the trunk which they can afford as long as the company keeps growing. Their problem is that the iPhone has just about saturated,the market for higher end smart phones. The rest of the market is lower end models on razor thin profit margins. Rental rap has not shown itself to have significant uptake and Apple has shown itself an also ran in online services and streaming TV.

         Apple has damn near abandoned the iPod and Macintosh, long since left the enterprise market, has no server hardware or OS. The iPad is in decline and Apple has lost the education market to Chromebooks. Exactly what is going to power growth as the iPhone plateaus/declines going forward?

         I was fortunate enough to have bought Apple Stock before the Rocket Ride up, but stopped adding a little over $300/share. Apple has essentially been range bound since the 7-1 split and there is great doubt Apple has left that behind. The fundamentals do not support the increase in stock price- it looks more like wishful thinking. I have not sold my Apple Stock but my investment was paid back with interest long ago- my remaining shares could go to zero and I would still be money ahead.

         If the economy goes stupid companies like Amazon have plenty to keep the balloon inflated, but Apple has little. That is what I am looking at.

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         1. Given the Apple’s PE is low compared to similar companies I don’t think it is reasonable to say the stock is overblown.
            What makes the street nervous is the reliance on the iPhone for a large percentage of their revenue. That has been creating the volatility for over a year. For once the market has responded positively to Apple showing signs of growth.
            I get the concern for the debt but in reality this is the best way to return money to the stockholders whilst reducing the cost of dividends by lowering the number of outstanding shares. Apple has 4-5 times the cash to cover the debt and may well pay it off once the low tax repatriation comes into play.
            Personally, I worry more about the fickle nature of the market than Apple’s fundamentals.

         2. As you point out P/E ratio is low for Apple. I see that primarily as a function of the Earnings part of the ratio being high at the moment. DavGreg has identified areas where Apple is reaching saturation point and faltering. If Earnings takes a sudden drop as a result you will see the low P/E rocket up immediately.

            I feel the current rise in the market is largely based on the expectation of a tax repatriation ‘discount’. If it ends up not happening I suspect the ‘large’ companies that would have benefited most drop in share price immediately.

         3. You made many interesting and well-considered points, DavGreg. As evidenced by the S&P 500 P/E (~26.2), the U.S. stock market is definitely inflated and is in the range in which many previous corrections have occurred. The only instances exceeding the current level are the late 1990s to early 2000s (and we know what happened after that), and the spike following the recent housing collapse when profits briefly tanked, thus spiking the P/E despite falling stock prices. So you have a valid point. Of course, some stocks will correct more than others based on their sector, P/E multiple, dividend, etc.

            Your contention that Apple is highly indebted is a subjective call. Apple’s total debt is somewhere between a quarter and a third of its liquid assets. Granted, most of those assets are located overseas. Even at the current tax rate, Apple would still have around $100B net if it repatriated its profits and retired its long term debt. Under the proposed 10% tax plan, Apple would have over $150B net. But Apple would is not likely to pay off all of its long term debt, regardless, because it borrowed at very favorable rates. People are almost giving Apple money.

            Apple’s tax liabilities are somewhat in limbo, but it is not nearly as drastic as you make it appear. With respect to Ireland and the EU, Apple is already funding the escrow account. Whether or not that money will actually be used or returned to Apple remains to be seen. With respect to U.S. tax policy, the indications are that any changes will, at worst, be revenue neutral to Apple. Of course, that is mostly speculation at this point.

            I won’t argue iPhone and iPods and Macs and such. Apple has done better in some areas than others. But I do not believe that the market for high end phones is saturated yet. Eventually, however, I agree that Apple’s gross profit margin will have to decline. The question is when. People have been predicting that decline for a decade and Apple keeps chugging along in the 38% to 40% range.

            I must disagree with your statement that Apple has left the enterprise market. On the contrary, Apple’s penetration of the corporate sector with the iPhone and Apple’s collaboration with IBM marks the first time that Apple has had a viable enterprise strategy, in my opinion.

            The last time that the “economy went stupid” about a decade ago, Apple did very well. Apple sells products that people want, even during the bad times. Amazon, on the other hand, operates on a thin profit and sells a lot of items that people may elect not to buy when economic times get tough. Would Apple suffer? Sure. But Amazon would suffer more with its P/E of 185.8 than Apple with its P/E of 15.7. Again, I see things a bit differently than you.

            But I agree that this is a time to be cautious. I have been pondering whether or not to shift my asset allocation in my 401K and whether or not to sell some or all of my AAPL shares in my IRA. Market timing is a tricky thing…

         4. The thing about a broad market downdraft is that many good stocks get hammered because of margin calls. If the broker calls your account and the only good stock in your portfolio happens to be Apple it could get sold to cover your losses elsewhere. In that downdraft a good stock can take a beating. That is a buying opportunity for those who are liquid but I am not so sure the Apple of 2017 could handle a sharp economic downturn- Apple in 2007/8 was a much smaller company with very little overhead.

            I do not want to be a pessimist, but there are an awful lot of signs that do not point to an endless rosy market and that would be true regardless who was in charge. There is so much accumulated debt from the Federal, State and Local Governments, from individuals- especially students and first time buyers of homes, the sub-prime car market and the significant debt of companies and corporations that at some point the debt load will pull things back to Earth. The expansion of credit has lost all relationship to growth in the base economy through 8 years of QE by the Fed and other Central Banks. Much of the run-up in stocks is the funny money from the Fed looking for a home. Same for a significant amount of Real Estate appreciation. Price Discovery in many markets has been distorted by the money printed out of thin air and loaned to the big banks for almost no interest.

            Then factor in that Trump wants massive increases in Defense and Infrastructure spending combined with significant tax cuts. More spending and less revenue equal big deficits which means more debt. With the Fed finally starting to raise interest rates the cost of borrowing to finance new and re-finance old debt will go steadily up.

            I am not that bullish on Apple’s resilience and have serious concerns for the market and broader economy. It is not just being a contrarian.

3. Perhaps finally closing in on the elusive $142.86?

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   1. I know where you got that number because I told my wife I would retire when it hit that number. She is so excited but I told her I probably wont keep that promise. I don’t want to retire and she knows it, but it is/was one of my targets/goals.

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   2. Are you targeting a $750B market cap? Or does that number represent a specific percentage increase/return relative to a particular investment date? Or is a $1M value target and you own 7000 shares?

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      1. $1000 stock price target before 7:1 split or 1000/7 = 142.86

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4. 

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   1. When the losing picks up (and it has already started), then I expect you to post the same graphic with the caption “So Much Losing!”

      But you won’t, because you are such a hypocrite.

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      1. Not favoring either side but I didn’t notice liberals trumpeting their failures either. Like the old saying “success has many fathers but failure is an orphan.”

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         1. To be fair, “liberals” did not need to trumpet the failures under the Obama Administration because Fwhatever and his ilk were working overtime on that task, already. They were so overzealous that they actually manufactured many failures, sometimes declaring failures before an event even occurred. Besides, I and others did admit when Obama did something wrong. The same will never be said of Fwhatever and botty and their ilk. Therefore, I will never stop fighting the good fight for truth, justice, logic, reason, evidence, and decisions based on valid scientific data. Fwhatever and his ilk perceive silence as tacit approval for their viewpoints and agenda.

            I must also point out that you did *not* see similar postings from Obama supporters on this forum over the last eight years, despite a number of occasions in which it would have been valid. How many times have we already seen this particular graphic from Fwhatever just in the past week. I saw it twice just in one forum thread. Like the old saying goes, “fair and balanced is highly subjective.” I am pointing out the imbalance.

5. What’s so ridiculous is just a few weeks ago everyone was saying how Apple was in the toilet and going the way of the Dodo bird. The cries of “Fire Tim Cook” were crowding the air. Honestly, there couldn’t have been that much that has changed with Apple internally over the past six months or so. It looks and acts like the same company to me. I really find it amazing how people have suddenly flipped. I’m not going to get carried away with all this noise. Wall Street giveth and Wall Street taketh away on just the slightest whim. There was a race to see which company, Amazon or Alphabet would reach the trillion dollar market cap first and Apple wasn’t even being considered.

   I’m happy Apple is making share gains to be sure, but will this euphoria only last for one financial quarter before the Apple hate and doom starts anew. I didn’t actually expect Apple to reach a new high any time soon in 2017 after watching Apple stock go almost nowhere since 2015. Even if the share price doesn’t go much higher I’d be glad not having to hear the constant doom and gloom about Apple’s empty future.

   It’s find it amusing how Tesla’s share price is able to keep rising and a good financial quarter wasn’t even required for the meteoric risk. Telsa’s fundamentals still look as poor as they ever did. Elon Musk must be been tweeting some of his magic to investor’s brains. Musk can create investor confidence in a way Tim Cook certainly isn’t able to do.

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   1. Apple IS in the toilet. Look at the share price. It’s NOT 200… I’m SO not impressed.

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