“The fundamentals of finance, attempting to discount future cash flows to arrive at a valuation, which then if offering intrinsic value beyond the markets would offer a margin of safety for investors, cannot possibly account for future disruptive innovations,” adanaclivinglab writes for Curating Ideas.
“Historically, this unknown factor had been perceived as excellence in innovation; recently, the idea of Apple’s continued disruptive innovation being too good to be true, beyond a traditional maturity curve, has resulted in irrational discount of the company’s shares and in creating what should be valued as a phenomenal margin of safety,” adanaclivinglab writes. “Disruptive technologies generate new innovations that unexpectedly bring an established market to an end (Christensen 1997)… The fact that Apple is not predictable in what it’s about to disrupt should not translate to an ignorant valuation of its underlying potential.”
adanaclivinglab writes, “Every product that Apple has released has been associated with disruption of multiple industries, making the prediction of demand for its products, rather unpredictable. Beyond demand, the company’s ecosystem has no compar[e] and it’s so well integrated with the product that the ecosystem’s stand-alone valuation is not yet addressed. As such, attempting to valuate Apple, merely on sale of individual products, without accounting for the fact that it’s establishing a way of life, would underestimate the role of Apple worldwide.”
Read more in the full article here.
[Thanks to MacDailyNews Readers “Dmitry” for the heads up.]