“Apple’s share price has increased rapidly in the last few weeks,” Horace Dediu reports for Asymco. “The rise to $600 was swift and broke the pattern of slow growth the the stock was able to obtain over the past few years. The level, however, shouldn’t have been a complete surprise.”
I think Apple is going to $600…It’s really not that complicated. Apple has a number of key drivers in its business model which have yet to be properly priced into the stock because I think it’s very cheap at this level. — Stephen Coleman, chief investment officer at Daedalus Capital
Dediu reports, “This prediction was made October 26, 2007. On that date Apple’s share price closed at $184.7. It may have seemed like a bold bet, but as Coleman noted, the reason why it would reach $600 was easy to spot.”
Read more in the full article, including what took so long, here.
MacDailyNews Take: Dediu posits that it took so long to get to $600 because “people are reluctant to believe the truth.” That well well be a contributing factor. The Christmas 2011 quarter may have woken up a lot of people.
However, there has been also been another potential catalyst: The removal of the Steve Jobs uncertainty. After many years, there are no more “health scare” manipulations. The weight has been lifted from the stock. Our own SteveJack wondered if Steve Jobs had become too much of a liability for Apple shareholders back in December 2008. In hindsight, he may have been right.
Steve Jobs resigned as CEO of Apple on August 24, 2011. That day AAPL closed at $376.18, up $2.71 from its open at $373.47. Currently, AAPL is trading at $613.15.
[Thanks to MacDailyNews Reader “Dan K.” for the heads up.]
Related articles:
Analyst: Apple shares will hit $600 in 18 months – December 27, 2007
Daedalus Capital CIO: Apple shares ‘going to $600’ – October 26, 2007
$600 is just the tip of the iceberg… We’ve got a new line up of the future of notebooks, iPhone 5 which has obviously been in the labs for a long, long time, and Apple TV maybe? All tied together with a new OS and iCloud?
It’s finally turning into Steve’s full vision. At least he probably had all the prototypes working together before his passing. That makes me feel better.
Speaking of metaphors, you do know that the 90+% NOT in the tip of an iceberg is, um, lower?
Someone explain why Google is worth 600?
that’s simple, it’s overpriced!
$35 difference at the moment.
Thats what I’m thinking. Way overpriced.
And Amazon at $200 plus. What has changed since their earnings. Mostly that you hardly ever hear Kindle Fire. Is that because it flamed out?
They have fewer outstanding shares.
Apple has 3 times as many outstanding shares as Google. If Google were to undergo a 3:1. Split it would be trading at around 216.
You’re confusing the price of a single share with the actual value of the company (the market cap).
Google is actually valued at just over $211 billion, or around 21.8 times earnings. If that’s the value attached to it, then that’s what it’s worth at that particular moment in time whether you agree with it or not.
It’s hardly a massive over-valuation: GOOG delivers around 25% net profits after tax compared to AAPL at 28%. I would argue that it’s not that GOOG is over-valued, more that AAPL has an extraordinary intellectual property portfolio that is undervalued, but also – because it could be argued that the gross profitability on its’ products are unsustainable (itself a result of conventional wisdom becoming fixated on the ‘pile ’em high, sell ’em cheap’ philosophy used by ‘lesser’ manufacturer) – their is scepticism that Apple can defy the mythical ‘laws of large numbers’.
Google uses a different model: every transaction is so infinitesimally minute that it’s difficult to make a case that the services it provides are over-priced.
If you have a service portfolio that is based on doing abstract operations with billions of trillions of bytes, you have no production bottlenecks, no distribution issues and very few ‘externalised’ support issues: that’s different to Apple who have to build ‘real’ things with molecules.
Things with molecules have to be designed and tested. They may have to be certified. They have to be put in boxes. Which then get put in bigger boxes and then get put on planes or ships. Finally they have to be supported when they get to a customer.
The reward is that you can charge several thousand dollars for some sets of molecules whilst there is no mass market for sets of abstract digital operations priced anywhere north of a ten-dollar note.
At that point, the value attached to either is kind of arbitrary: which model do you prefer? And which company do you feel has better growth prospects, better management or a better chance of executing on its preferred model.
Wow thanks for that explanation. I had a better understanding now about Google vs Apple stock. 🙂
Don’t confuse value with the stock price. The value of a company is not indicated by its stock price. Google as a company is worth $212 billion today. That value is divided into shares. The price of a share is the value of the company divided by the number of shares. More shares > cheaper share price. Fewer shares > higher share price. Today, a share of Google costs $653.
Apple, on the other hand is valued at $573 billion. Each share of stock is priced at $615. The fact that Apple and Google shares are in the same ballpark is coincidental.
I gotta read Dediu’s wild theory’s about Apple performance with a $600 a share price and people shouting that Apple is in a bubble with a P/E of 17. Then I look at Amazon’s share price this morning shooting up like a geyser with a P/E of 151 and easily matching Apple’s three-month performance like it was nothing. I really, really don’t understand why Amazon is such a favored stock except that Warren Buffett must be madly in love with Jeff Bezos.
I tell ya, Apple had better start selling some more iPads and a hell of a lot more iPhones if shareholders expect Apple stock to reach $700 this year. I was almost scared to look at Priceline, but for once this year the share price was actually in the red to momentarily halt its daily non-stop movement towards the inevitable $900 a share mark.
Why the hell aren’t Amazon and Priceline ever in a “bubble” like Apple is always claimed to be?
because priceline and amazon are not news worthy. They dont create hits. Like cramer says just divide 600 by 10, at 60 going to 70 is not a big deal. People have issues with apples market cap more than anything.
Well, Apple is making too dang much money, 50x Amazon, and what’s worse, growing too dang fast, 70-some percent per year. Amazon, far more sensible and safe, is a studied, careful 18 percent.
Of course it gets that multiplier — so much growth that it will surely make up. Just wait and see.
An amazon in the bush (P/E 150 or so) is worth, what, about nine apples in the hand?