Investors don’t understand Apple’s math – a mistake

“One place in today’s market that numbers are misleading are in regards to Apple (AAPL),” Bill Maurer writes for Seeking Alpha.

“With Apple being so big, there are millions of numbers you could use to analyze Apple,” Maurer writes. ” For the average investor, that may be too much. But lately, Apple’s stock has come down quite a bit, and investors might not understand fully why. It has to do with some Apple math that investors don’t quite understand, and that’s a mistake.”

Maurer writes, “Today, I’ll show a bunch of numbers that don’t show the whole truth, and why Apple is still a great buy at current levels… Investors see Apple’s guidance, and think revenue growth is slowing tremendously and earnings are plunging. That’s not exactly the case. Investors see conservative guidance, and they get spooked. Well, that’s the history of Apple. Investors see Apple proclaiming low margins, and they panic. But that will mostly be a one quarter issue, they will rebound. Numbers are sometimes misleading, and they have built up so much fear around Apple that the stock keeps dropping. Once people understand the numbers, they’ll realize Apple is still doing quite well. Last year, I stated that buying Apple under $375 was a tremendous opportunity when there was just as much fear. This year, Apple under $550 is just as good of an opportunity.”

Read more in the full article here.

[Thanks to MacDailyNews Reader “Tayster” for the heads up.]

17 Comments

  1. If APPL investors don’t understand the Apple’s math then Apple isn’t doing a good job of telling their story. When a company does well in telling their story, investors are brought on board and the stock soars.

    1. Apple could, I’m sure, tell their story until they’re blue in the mouth, but ‘analysts’ would still stick their fingers in their ears and go ‘lalalalalalala’, because they WANT to see the stock come down, so they can then buy up stock and sell again when the stocks go even higher.
      Rinse and repeat.

      1. I have to agree with you as far as the hedge funds will do whatever they want, whenever they want and any excuse will be good enough reason to take Apple shares down. I’d have to say it’s a rather corrupt system that unless individual investors go along with what the big boys do, they can’t win. However, I would like to see Tim Cook or the CFO of Apple actually come out and say that Apple is doing just fine and that the stock is merely being manipulated by greedy investors. I’d love to see what would happen. Would the hedge funds then really put the screws to Apple or would they back off? It would be nice to see a company come to the defense of shareholders.

        However, if Apple is really selling lots of products and Apple’s books are excellent, I guess they shouldn’t have to say anything but it does leave the longer-term shareholders rather unprotected. I know I’m sticking with Apple, but all the cockeyed theories and specious blogging articles leaves me rather creeped out that so much foul play is going on. Far too much misinformation is being spread about.

        1. ‘However, I would like to see Tim Cook or the CFO of Apple actually come out and say that Apple is doing just fine and that the stock is merely being manipulated by greedy investors. I’d love to see what would happen.’
          Ab-so-lutely no way. Sorry, but that would immediately wipe 25% off the stock price, being interpreted as a sign of weakness. Think about the press statements issued by companies on the way down. Think about RIMM. History is littered with reassuring company statements just before sales fall off a cliff.
          For nervous investors, there’s a really good read over at http://www.asymco.com about the swings in Apple’s stock price. Intelligent and calming.

          1. I vaguely remember in October of 2008, Steve Jobs being interviewed by Jim Goldman on CNBC about Apple’s shareprice and Steve stating that the price was being manipulated by hedge funds or something along those lines.

            It was the same time when Apple first published non-GAAP data and Steve was the only time on the conference call. THAT, was a clear indication that Steve was annoyed by the stock price, so much so, that he gave the analysts the non-GAAP data, something which I and others could estimate on our own, but which were misunderstood by professional analysts. I distinctly remember Shaw Wu stating he didn’t understand Apple’s deferred revenues. I wrote a couple Opinion pieces on the topic here on MDN back in 2008, which are now gone.

      2. Stock traders like stocks that drop because they drop faster than they go up and when you buy PUTS on the stock, you make more money faster than when you buy CALLS for a rising stock. It is all about leverage and time when you make a living at it.

    2. BULL. Apple tells their story through their products. Products that sell out by the millions in a few hours, products that people stand in line for hours to get. Products that people actually want, NOT settle for.

      Investors are too easily swayed be FUD tech writers and analcysts. No matter how many investors are on board, or how many tens of millions they pump into Apple, the tech FUDs and analcysts are always ‘disappointed’ for some reason or another. No matter what Apple does, its never enough, or good enough for the analcysts.

      Its good that Apple’s philosophy is worry about making great things, and the profits will follow.

      Analcysts and other can be disappointed all they want, Apple’s cash pile will grow larger, no matter what the stock is doing. Customers will love and be delighted with their gears, and keep buying. Apple will keep pumping out cool stuff, and even causing a revolution now and then every decade or so, laughing all the way to the bank while doing so.

      1. You are right but only in your own mind. The market has spoken and I just trade accordingly. I love Apple products and their striving for perfection. The market just doesn’t believe that they can be that good.

  2. The gov’t and the FED have been fighting the bear tooth and nail with record spending, an unprecedented expansion of the money supply, and artificially low interest rates. Both are running out of ammunition to keep this rally going. Looks like 2013 is going to be the year investors get clawed to death for the second time in less than 10 years.

  3. A lot of Analysts seem to take whatever levels Apple report one quarter and then mentally reset them to being the same as breaking even, then if everything isn’t massively increased the next quarter they decide they’re doomed.

  4. Last quarter, the Analysts were upset because Apple missed the Analysts numbers. Apple didn’t miss Apple’s numbers.

    So, here we are again with clueless Analysts being used to pound the stock value of Apple down. Again! I believe that they have scared of those that will sell and can’t seem to push AAPL any lower. This is Apple’s biggest quarter and now Apple is selling the iPhone 5 in China. So, new iPad mini and iPhone 5 and they have know idea about what the real numbers are. They just want to get their cost down so they can buy in cheep!

  5. anal-ysts/media/big investors (who manipulate the stock at will) “built up so much fear around Apple that the stock keeps dropping” says SeekingAlpha author…well, let those who build fear, fear the wrath of those they affect negatively these bastards!

    our gov. is too lame to fix the fiscal or economic or any problem. they should never have bailed out the banks which are the culprit of all economic problems, historically as now. plus the gov., were they responsible instead of corrupt up their asses with interest groups & bribes, should have force the SEC to make stock manipulation illegal.

    instead of increasing gov. to a police state, decrease it, make the country more efficient, more modern, more web 2.0 or society 3.0. get your shit together, through zen efficiency. one way to start is to clean up the banking/stock market mess. get rid of “criminal” loopholes & stupid games. rid the holes that enable greed to fester. don’t give them the fertile land, seeds or dung. let them earn legally or through work, not cheating or corruption. by straightening a few things, there’s no need to grow gov. but plenty of upside in growing the economy.

    cut the bull.
    grow the dung.

  6. Apple is the largest company in the world making $100B+ annually, increasing at a phenomenal rate. It has only 17 products (not counting OSX and accessories) in 5 product lines. They update products almost annually without increasing prices. Apple continues to offer the best available products in each of their 5 product lines. In doing this Apple continues to stress that the hardware is only one part of their world-leading ecosystem in two platforms: iOS & MacOSX. Apple has the most profitable (by square footage) retail stores in the world. Their online stores (iTunes and App Stores) are legendary.

    This is the most successful business model in the world today and, arguably, the most profitable in the world. It is hard to criticize what they do at any level. Sounds like a good investment to me!

  7. When you look at the PE ratio of a company like AMZN you just have to shake your head in amazment when it comes to AAPL. The way Apple gets traded is an absolute disgrace to the integrity of the stock market.

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