“Apple (AAPL) is perhaps the biggest anomaly on Wall Street,” Geordy Wang writes for Seeking Alpha.
“The company is the perfect turnaround story. It fought tooth and nail to claw its way back from the brink of market irrelevance in 1997 to become, to date, the most valuable company in the worId,” Wang writes. “It has crushed every competitor that has stood in its way, it’s perfectly positioned to ride the explosive boom in smart phones and tablets, its balance sheet is an absolute juggernaut, and it’s led by the best talent in the business.”
Wan writes, “This is the rare company where no one has a bad thing to say about it. Out of the 42 analyst firms providing coverage on Apple, exactly none rate it a sell. So why does the stock trade at a P/E of only 15?”
Here are some of my best guesses as to why Apple isn’t getting any love from the Street.
• Steve Jobs Is Gone
• Apple Isn’t Very Shareholder Friendly
• A Clouded Crystal Ball
• The Law of Large Numbers
Wang writes, “None of these factors in isolation could sandbag a goliath like Apple, but put them all together and you might have a convincing explanation for why Apple isn’t getting any love from Wall Street.”
Read more in the full article here.
[Thanks to MacDailyNews Readers “David E.” and “Ellis D.” for the heads up.]
I think it has more to do with Wall Street simply not knowing what to do with a 30 year old company that is one of the best growth stocks in recent memory.
It’s like meeting the perfect person and being obsessed with trying to figure out if they have any flaws.
So THAT’s why people stare at me…….
Ah.. Me too
Well put indeed. I will use this in a future book, with references.
AAPL breaks the mould of all the tools the Street uses to measure the value and potential of a share. They just do not get Apple. It does not fit their mould, their established beliefs about what is possible.
Yeah, Apple was also hated when Steve Jobs was along.
It’s even worse, considering Apple current price of about $380 per share includes about $80 per share in cash. So Apple’s “business” (after subtracting the cash) is only being valued at about $300 per share.
No. None of the above.
It’s Wall Street being so corrupt that they don’t want to make money on stocks the old fashioned way. Buying and then waiting a few years for the company to do well, then sell.
No, they want instant gratification. Buy sell in one day or a week. So stock manipulation is king now. Number one method is counterfeit stocks.
Read about it and educate yourself.
Playing in the stock market now is no longer a safe bet when any company can be targeted and pushed to the brink of bankruptcy. Hopefully Apple is big enough to absorb any shady stock market crap that Wall Street might try.
“It’s not paranoia if they really are out to get you…”
Just in the news today is a note on speeding up automated trading systems.
A new fiber optic cable across the atlantic is touted as carry buy-sell orders 6 milliseconds faster and that could yield some big trading firms as much as $600 million more in trading profits per year.
That may not explain Apple, but it shows how vastly different the “stock market” is today from what it was in our grandparents day.
I watched a TED talk vid that discussed this very thing. It’s amazing how it’s become like a video game.
Things may change. Wall Street likes face time and Steve Jobs gave then none. Maybe Tim Cook or an Apple PR guy or gay may change that. At one time, Apple had what they called an Apple evangelist to go and get the word out to the masses. Maybe Apple will resurrect the evangelist job to fill the Wall Street vacuum.
Hope not. If Apple has gotten where it is without pandering to the suits in Wall Street, no need to start conforming now. That would be bad precedent.
Guy or gay. . . Freudian slip or homophobia?
So what gives?
The “law of large numbers” has never been applied to business growth. It’s use has been bastardized by media talking heads.
All other points are nonsensical. For crying out loud, the argument used to be Jobs health. Now that he has stepped down, the claim is that he is no longer there. Bullshit.
The reason is that Wall Street make thin pickings on Apple as they don’t make overpriced purchases and most people buy the stocks to hold not turn over in the short term.
While it may be more ‘spectacular’ to say that Apple crushed it’s competition, I feel it’s far more accurate to say that they beat them fairly and squarely. They did it by thinking outside the box and making the right decisions, thinking faster and gauging the market better. Crushing makes a different implication that doesn’t allow for the intelligence to create new and profitable markets. They just won. So far, everyone else has come in a distant second, and that’s through their own decision making.
“It’s the economy, stupid!”, as the Ragin’ Cajun said in 1992. Apple is perceived, as a consumer oriented company, though it’s products are now being embraced by many businesses. If the consumer economy is perceived as being in danger, Apple will be perceived as having potentially lower results, despite it’s great products. Consumer confidence is at very low numbers right now, because consumers see the incredible debt being added by this administration, and they see their jobs being very much in jeopardy due to the adminstration hating the private sector. So, what will consumer spending on nice fancy tech toys be at Christmas (am I allowed to say that) by the large numbers of unemployed and those who fear they will be unemployed. Apple will get credit for it’s potential when the economy is not being driven off the cliff by an Ivy League doofus.
How did Apple do in the last recession? 2008?
America is not the only country in the world. China is a bigger market for Apple and China doesn’t have Christmas.
Apple in its 35 year history has always been out of favor with Wall Street. This isn’t a new phenomenon. In my humble opinion its for two reasons.
First Steve Jobs’ very public proclamations that he, with Apple, has always set out to change the world. This is not what Wall Street wants to hear. How do you make a profit from changing the world?
Second, Apple as a result of Jobs’ world changing vision has always been product focused for the long haul. Wall Street prefers companies that are focused on profits and quarterly performance.
The fact that Job’s approach was successful, in the long run, is all the more grating to Wall Street and its world view.
@Norm Dwyer,
“Apple in its 35 year history has always been out of favor with Wall Street.”
Did you happen to notice the huge run up over the last few years? Did you happen to notice that until recently, AAPL was the last to go down even when the rest of the market was taking a tumble? Is that what you call being out of favor? AAPL has been an historic market leader for some time.
Wall Street couldn’t care less about the “changing the world” comments. They focus on the money. As they should.
This isn’t about Wall Street at all. They do what they do and have always done. Nothing has really changed accept maybe AAPL’s accumulation rating.
It is what it is. It happens. Get over it.
You sound unusually cranky. You a day trader?
1 great response!
I second that. He does sound like he needs a nappy.
A non-lofty valuation has less/no room to collapse. Lofty valuations are driven by speculation. Apple is so consistent with excellent results that there really be an upside surprise. A high valuation buys nothing for those init for the long term.
Broken “full article” link.
Apple does not covet Wall Street, it covets street sales and now that China is on board, competitors beware.
Apple has been very friendly to this stockholder.
Me too. Safer and more profitable than any bank.
Wall St doesn’t get the inside scoop with Apple like they do with all the other companies. Therefore, they are not in the know and don’t know how to trade.
Link loops back to MDN post. Here is the full article..
http://seekingalpha.com/article/293310-why-apple-doesn-t-get-any-love-from-wall-street
There was a time when Wall Street types were educated about business. Now all they teach in business schools is how to use Excel spread sheets. There are no MBAs. Only MSS.
Geordy Wang’s best guesses are pretty poor.
• Steve Jobs Is Gone
First of all, SJ isn’t “gone.” Second, the stock valuation issue has existed for quite some time before he transitioned from CEO to COB.
• Apple Isn’t Very Shareholder Friendly
A large majority (70%) of the Apple shareholders are institutions. Apple is making money and increasing share price, which makes investors happy. I suppose that various institutions may believe that they do not wield sufficient influence over Apple. But money talks louder.
• A Clouded Crystal Ball
Just because Apple does not publish dubious long term roadmaps and product release plans does not mean the future is cloudy. When in doubt, go with demonstrated success – Mac OS X, iPod, iPhone, Macbook Pro, iPad, MBA, iTunes…enough said. The Mac regulars on this forum know that the clouds of secrecy around Apple part on a fairly regular basis to reveal the next great thing. Analysts are doubting just because they can, figuring that they will eventually be correct and get bragging rights for predicting the downfall of Goliath. It seems strange that those same analysts don’t seem to have much difficulty believing in the vaporware promoted by other companies, despite regular, painful lessons to the contrary.
• The Law of Large Numbers
Laws are made to be broken. Perhaps the problem is that “large” has a new meaning in a world population approaching 7 billion. Apple is a huge growth company with no debt and a massive pile of cash and securities. That unique situation is certainly worthy of an exception to the rule.
How can a company invest in AAPL when their IT dept is telling them that PCs are the future?