Apple is not worth $460

“My reason for investing in AAPL is simple and most likely too simplistic (or dumb) for most. I do not want to write about AAPL’s future and what their product pipeline is like. I want to reiterate that I did not buy AAPL for their product pipeline,” Jae Jun writes for Seeking Alpha. “Instead, AAPL at the moment is a classic case of ‘heads I win, tails I don’t lose much.'”

“Seth Klarman also referred to this as downside protection investing,” Jun writes. “All you have to do is protect the downside and the upside will take care of itself.”

“AAPL is cheap and there is no need to complicate it. Fundamentally, it is extremely cheap by being priced for zero growth,” Jun writes. “Zero growth expectations with a bullet proof balance sheet protects the downside and AAPL will have to experience some severe negative growth for it to be a value trap.”

Muchd more in the full article here.

42 Comments

  1. As we can all clearly see, the price of AAPL shares has nothing to do with fundamentals. So, you can take all of your calculations and shove them where the sun doesn’t shine. It may go down a lot more before it’s done going down because it’s clear that buyers are not interested.

    1. agreed, but why have people lost interest?

      – the hype masters have lost their spin
      – it just aint cool enough to make slightly bigger screens
      – award winning designs are having a creative block
      – the os is lacking candy
      – its war chest is seen as too greedy

      what is Apple doing wrong yet still making record profits?

      1. What is wrong with Apple is that their financial model doesn’t suit Wall Street’s financial model. All you have to do is look at the companies that are making huge share price gains. You can see they don’t really make much in the way of profits at all but they’re leaders in their category and are pretty much standing in the ring unchallenged. It’s harder for those companies to lose to themselves. Apple has been thrown into a free-for-all-caged smartphone/tablet match with everyone throwing kicks and punches from all directions.

        Why would an investor go with a stock that might get kayoed when they can go with a stock that is a sure winner? And even if Apple is the winner, what is that investor going to gain? Practically nothing. Besides, do most people pick the fighter everyone says is going to lose? No, they don’t. Anyway, as near as I can tell, profits don’t mean anything to Wall Street unless you also lead in market share. If you don’t lead in market share then those profits are seen as fleeting.

        The stock market is nothing but a casino and the players tend to bet on the side that has the most likelihood of winning. Everyone says Apple is the most vulnerable and has the least chance of winning, so why should investors (basically gamblers) take the risk. Apple is dead money because no one wants to play the supposedly long odds which I think is being based upon dwindling market share. As near as I can tell, everything on Wall Street comes down to having major market share in any industry.

        The way I see it, as long as Apple stays the way it is, the share price will never go up much higher than it is now no matter how much they make in profits. Apple will either have to increase market share drastically or get into some profitable side business which has far less competition. I’m only saying that’s how I see it which obviously may be completely wrong. Apple’s continually shrinking P/E just tells me that the company can’t possibly return to higher share price levels the way it is. As a shareholder, I’ve given up expecting higher share prices. I’ll just have to settle for increased dividends.

        1. I think that sounds like a pretty valid perspective. It makes a bit of sense. If Apple hasn’t released a product this quarter to open up a new market, then they’re just competing against everyone else who’s copying their wares (as far as WS sees it), not dominating any market, simply taking the cream off the top and leaving the rest for the sharks. We who are long AAPL think that their revenues and profits should speak for themselves, but the big funds, those that own 70% of AAPL aren’t buying it. Someone else posted about the possibility of a stock-split opening AAPL up to more individual investors. I suppose that too is possible, and could be good for the stock price. Anyway, I don’t know where the bottom is for AAPL this time around. It really seems to be having a hard time finding support at any level.

    2. Actually, that seems to apply to a lot of companies. Look at Amazon, they are losing money and their stock goes up.

      Wall Street is about stories and perceptions, selling the sizzle. No one is strongly promoting Apple but there are lots of detractors. Look at Forbes or Motley Fool or Wall Street Cheat Sheet. When there is an article about Apple the first couple of comments are consistently about how happy someone is that they switched from the iPhone and what a terrible experience it was. Some of them are so well written they are clearly paid placements.

      1. Here is an example of the kind of post I mentioned. This post was unrelated to the topic of the article but slammed Apple nonetheless. MDN should start a thread with these somewhere. Look how compactly it was written, though the grammar is a little off. In a short paragraph they managed to slam the iPhone, iTunes and praise Android. Notice that they never mention what products they like, just Android. I’m sure this was a paid post.

        Quote:
        I am happy with my android’s slide-out keypad and the extra features. Had an Iphone for a few months and just couldn’t get it to do what I wanted. Very confusing for a first-time user and the I-Tunes are a pain in the butt. Especially when you were forced to choose a long log-in and password. The Android was more precise and reliable for me, so I pulled it back out of the drawer and sold my I-pad.

  2. You get it Mr. rdiddly. Congratulations of being among the one percenters around the MDN universe who has this figured out. The reason for buyers’ lack of interest is because the management team has NO VISION of the future – the only part of time that investors are interest in – and NO CLUE of what to do about the cheaper, inferior products they find themselves competing with and losing.

    1. You are likely the most annoying twerp out there pp. What exactly does “…the only part of time that investors are interest in…” mean anyway? Apple is not losing anything to cheaper, inferior products and they are not competing with them. You sir, are a bonehead.

      1. Annoying? If so, only because the truth is such a bitter pill. What is meant by my reference to the future is that is ALL Wall Street is interested in. Investors have NEVER cared about what was accomplished yesterday – only what the future holds. Under the uninspired leadership of Tim Cook, they seen little to get excited about so time to unload AAPL. You know, just what is happening AGAIN today!

        1. “Inferior products”? INFERIOR???

          Can you name the two best-selling smartphones in the world, pp? Answer: the iPhone 5, and iPhone 4S.

          The best-selling tablet in the world? Answer: the iPad/iPad Mini. Hands down.

          Desktop/portable PC sales are comparatively irrelevant, but the Mac share is GROWING world-wide, and all others are in decline.

          So . . . what’s your point?

        2. Hi, it’s me again. I’m an investor and I have always cared about what Apple has done yesterday. I am not the only one. In fact it goes beyond Apple.
          “A generation which ignores history has no past: and no future.” – Lazarus Long, from the works of Robert Heinlein

          There are other such quotes. If you believe otherwise, feel free to buy up as much wall street stock as you can.

          It is obviously and painfully clear by your mono cultural diatribe that you have Tim Cook. Yet for all the time you have posted here you have not once suggested an alternative. If I missed it well, feel free to elucidate me.

          You remind me of the bunch of scientists that worked so hard on getting the darkness out of the room prior to brining the light in.

          You are all dark and hateful on Tim Cook. Fine, but until you suggest an alternative you are all dark and hateful on Tim Cook. Keep repeating it, it worked for Hitler and the Jews, it might work for you too.

      2. You are likely the most annoying twerp out there pp.

        Yes. And? Study trolling rdiddly. ppeterson is nothing but yet-another troll and is therefore entirely ignorable. Like my stalker “G.M.” (genuine moron), he gets his spooge off by making other people miserable and couldn’t give a rat’s how he does it.

    2. i think apple was so convinced that their patents would never be challenged and that they had complete rights defending copy cat products… unfortunately this was not the case

      samsungs gain is on the lower end products – all dead end Frodo os early android devices, as apple said they would not make crap… i think apple was well aware that samsung would take the microsoft low end – but high volume approach…

      apple needs to make a less expensive phone simple as that

      1. What y’all are missing in calling for Apple to compete at the low end is that it is not in their DNA to do so. They are in the business of producing products that amaze and delight. They will be releasing new products in new categories shortly and you will all wonder why you thought they should be wasting time competing with Huawei. That’s where the puck was. Apple is skating to where the puck will be. Then, when they’ve shown everyone yet again how to do it, and they’re all off racing to the bottom, Apple will be doing it all over again with the next big thing. Quit being so impatient.

          1. Why is your nickname equivalent to urine? You are such a troll. Go stroke your one incher on the Android sites. If you hate Apple so much go play with your little copy cat Android stuff punk

          2. Sorry, but nope, pp. That’s why Apple’s TV product is still such a topic of speculation. Now it’s the iWatch. People can’t wait for Apple’s next big thing. You forget that Jobs left a 5 year pipeline of new products. What’s happening with Apple products and Apple’s share price right now has absolutely nothing to do with Cook. The stock price took massive dives when Jobs was at the helm too – also for no good reason. It’s just the nature of Apple and of Wall Street.

  3. Apple will introduce the iWallet.

    the cashless, credit careless, family photo galore wallet to beam digital handshakes and signing for all purchases transactions. The banks will love it and Wall Street will return to invest… LOL.

    1. The “they” you refer to, x, I believe, is the institutional/hedge fund investors who presently control 70+% of AAPL shares worldwide. And you are absolutely, irrefutably CORRECT in what you say!

      As long as a handful of “analyst/experts/financial wizards/plutocrats” believe a stock is dead–and they control an overwhelmingly large block thereof–WHAT THEY SAY GOES! Get used to it, people.

      Until Apple, Inc. makes its equity available to a much, MUCH broader spectrum of investors (you know, little guys like you and me, if I may be so bold), THEY will control the stock’s direction and price point. That is–observably–a fact. However, a 10 to 1 split would bring AAPL down into the $40+ range, and a 100 share block would be available (virtually) to one and all. (And please, don’t pull out that old “the math’s the same either way” canard here, for it flies smack dab in the face of human nature.)

      Just sayin’ . . . .

  4. Just because its cheap doesnt mean it can’t go down even more. And who is to say in the long run P/E has to be 20 or whatever isn’t that too just a theory. Maybe in the long run its still low. And in the long run the company is dead and so is everyone else. So how is the stock market suppose to work? Hmm

  5. This is why I will stop reading anything from Seeking Alpha. Every morning, my inbox is flooded with contradictory blog emails about Apple from SA. Few if any are worth reading. These are written by amateurs spewing opinions but without any facts.

    Rubbish.

    Meanwhile, George Soros has recently taken a significant position in Apple.

    Which begs the question: do you listen to a blog by some 32 year old punk still living at his parent’s house or to a billionaire investor?

    Why we read this crap is beyond me. Seeking Alpha is little more than a worthless circle jerk.

      1. Well, they need to understand dominance in sales per square foot of retail store, percentage of mobile phones, tablet, web traffic, app and program sales on iTunes, world and business market penetration, etc…. A rational person would call it some kind of being a SUCCESS.

  6. What if Apple’s strategy is to just continue to incrementally improve their current lineup of products, while seeding the occasional new product rumor about TV sets and Watches just to send their competitors chasing after their tails.

    After the crap they have endured in trying to keep everyine from stealing their stuff, if I were Apple i would play this game for a while, until the competition tired from the exercise. Then hit them with something amazing.

    At this point Apple has nothing to lose in doing so.

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