Apple is showing the world two different faces — and that’s a problem

“In the wake of Twitter’s IPO, the word frothy is getting tossed around a lot,” Kevin Kelleher writes for TIME. “It’s what you say when you don’t want to be alarmist about another dot-com bubble, but you still see a classic sign of a market gone loopy: a disconnect between what a company is actually doing and what investors, in valuing the company in the open market, think the company is doing.”

“Twitter’s $25 billion valuation is based less on the company today than on a company investors expect to exist in three or four years. The high valuations of Pinterest, Uber and others rely on the same hope,” Kelleher writes. “What’s less acknowledged these days is that such a disconnect between reason and rationality – between the stock and the company – is happening with old, big tech giants too. And nowhere more so than with Apple.”

“Apple the company is doing about as well as ever has,” Kelleher writes. “Apple the stock isn’t doing quite as well. Over the past year, it’s fallen 11%, even while the Nasdaq Composite Index has risen 29%. And it’s down 26% from its record high of $705 in September 2012. It’s trading at 12.9 times its recent annual earnings and 11.7 times its estimated earnings this year. The S&P 500′s average historical PE ratio is 19.4. Apple is such a well-known company that its stock performance reflects on its consumer brand. And so disappointment in its income statement ends up bleeding into the company’s public image.”

Read more in the full article here.


  1. The last paragraph is the important one in the article:

    “Such sentiments explain Apple’s lackluster stock performance this year. But they seem out of touch with Apple the company, which in some respects is still at the top of its game. A company’s operational health and its stock performance can diverge for a long while, but they inevitably come back into sync. The debate will rage over which Apple will prevail, but right now it looks like this is a well-run company trading cheaply.”

    1. I always prefer honesty and sincerity over pyschopathy. And how better to categorize the current trend in business (or biznizz as I prefer to call it) than a sharp descent into psychopathy?

      It’s dangerous to casually throw a charged word around and brand people with it. But the more I study psychopathy and the more I study the current trends in business, the more I keep finding direct similarities between the two. Right or wrong, I find current business to be deeply sick and self-destructive. Apple is NOT. I like that.

  2. This isn’t an article so much about Apple or its ‘two faces’, rather, it’s an article to illustrate the disconnect investors have between what’s real and what’s hoped for.

    Today’s stock market looks more like a casino than an investment vehicle. So called ‘investors’ hope for huge returns by gambling on profitless companies. Instead of investing on companies developing real solutions for the world….like Apple.

  3. The biggest takeaway is yet again obvious: Wall Street is severely over-valuing and hyping social media companies, in essence creating a mini-bubble with social media stocks.

    The rest is just plain silly.

  4. we should all know this:
    the stock market is sold by the real player to chumps as “a potentially solid investment” but is and always has been a game. those who think stock price is a reflection of a company’s true worth at any given time are mostly the chumps mentioned above.

  5. And so disappointment in its income statement ends up bleeding into the company’s public image.”
    What a CrazyFoam! Who’s disappointed in AAPL’s income statement? Only the stock manipulators and the haters. They’ve been mad since AAPL’s weight on the NASDAQ was extremely high–somewhere around 3.5% ($700 billion market cap) and have been trying to whittle them down to size ever since. Bunch of filthy haters.

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