“Despite reaching a new peak share price for 2013 that pushed Apple’s market capitalization above $500 billion, the company’s valuation remains where it was in the spring of 2012, at a time when analysts were predicting Apple’s market cap would soon double,” Daniel Eran Dilger writes for AppleInsider.
“In April 2012, analysts Gene Munster of Piper Jaffray and Brian White of Topkea Capital Markets had both set price targets envisioning Apple reaching $1000 per share within the year, a price that would have pushed the company very close to a one trillion dollar valuation,” Dilger writes. “Apple surpassed analysts’ estimates for iPhone sales in that spring quarter, beginning an upward stock trajectory for 2012 that peaked in September 2012 at around $700.”
Dilger writes, “Overall, this seems to indicate that the confidence analysts placed in Apple’s fundamentals at the beginning of 2012 was correct, and its impact on the company’s actual share price was simply delayed by a misinformed, year long ripple of irrational trading behavior…”
Read more in the full article here.
Any story by or about analysts is pure nonsense.
A “year long ripple of irrational trading behavior…” that is fueled by advertising dollars from Samsung. These “analysts” know who is keeping the roof over their head. Neither the facts or “the truth” are what caused the PR “irrational trading behavior”. It was the money in their pockets week after week, month after month.
Tim and the board, advertising dollars are what greases the wheels and moves the stock value!
I like your insights, and you’ve pointed out why I like the fact that Apple spends so little on advertising comparatively. The short term gain is not worth the long term gain.
I was wondering if anyone could show me the one fundamental metric that makes Google worth $500 a share more than Apple. I’ve been trying to look at all the basics but I don’t see anything that stands out. Even if Google were to have greater growth it doesn’t come out to twice Apple’s growth. It just seems as though Apple beats Google on everything except gross margins. Why would investors pay twice as much money for a stock in a company that is practically a match in every way yet Apple has twice the revenue and twice the net income? Any thoughts about this?
It’s very simple actually. It’s spit vs. swallow.
It’s all about predictability, control, and growth.
Stock traders need something the can control and manipulate. They come up with schemes and investment vehicles (such as debt vehicles, or stock buyback plans) that when executed produce a known result.
Then, those of us without a clue can “invest” by taking our cash, buying a stock, and then transferring that money to some other rich guy in some kind of commission or equity scheme.
The market doesn’t yet seem to have control over Apple’s finances like they seem to have with other companies. So, they can’t make targets and prices higher because their models don’t fit.
Why do you think Einhorn is making such a fuss? He’s trying to figure out how to gain control so he can make better predictive models.
Remember, traders don’t care what the price of stock is. Only that it moves. And it moves predictably based on what typically happens to stock when a company makes a transaction. There are always winners and loosers. The trick is who gets to hold that $1 bill today.
How about number of users? Hard data about this is hard to find, but a quick internet search suggests about 75% of the world uses Google search or another Google service, while only at most 25% of the world uses any Apple products. With most people directly using Google services daily, and the fast access it provides to online information becoming an irreplaceable part of modern life, it’s a company that can appear undervalued at any price.
Apple plays a crucial role in the information age as well, but I’d say its mark is not as obvious or visceral as Google’s. In fact, most people only experience Apple’s role in the information age by using Apple knockoff products created by companies Microsoft, Google, HP, and Samsung – many likely completely unaware of Apple’s involvement.
Well, that makes some sort of sense to me but I can easily use Bing or Yahoo as my search engine, so I wouldn’t think that Google is exactly irreplaceable, especially in China but I see your point. The thing is at one point Apple and Google were running neck and neck in share price and it just diverged so quickly that I didn’t think that big a change had come so quickly. If Apple were to create its own search engine for iOS, Google’s search engine share could drop rather quickly.
Anyway, your points made me think about it a little more. Apple possibly needs to modify its business to create a service that is somewhat irreplaceable. Maybe some mobile payment service would do the trick. With all that cash wealth that Apple has, one would figure they would know how to add that certain bit of value to the company. I’m only guessing and it’s probably not as easy to do as I think it would be.
In my experience, using Yahoo or Bing for search is like using Windows instead of OS X. In theory, they both can do the exact same job. But every time I do a direct comparison, the difference in quality and overall experience is too vast for me to ignore. From a design standpoint, Google feels simple and easy, while Yahoo and Bing can feel convoluted, unnecessarily cluttered, and frustrating. Crucially, Google has an nearly clairvoyant (or magical) way of just finding exactly what I’m looking for. Its competitors seem years behind it technologically, playing perpetual catch up. They also seem to lack the culture of simplicity and user focused design required to match or surpass the Google search experience.
Your sentiment is valid, but you need to consider price-earnings multiple (P/E), price-earnings-growth (PEG), and other parameters that are much more meaningful than just share price.
Share price, alone, means nothing in the absence of other data such as the number of outstanding shares and the earnings per share.
Ah, what a roller coaster ride. I like this part where it starts going up and up and up. It will, think about it, the headline at MDN when Apple stocks reaches a new all time high.
The jouranalist will drool so much over writing something around that topic that the analyst will be lining and mooning up to the chant of “Manipulators, manipulators, manipulators.”
Daniel Eran Dilger is the best Apple analyst and industry observer writing today. If you want to know about Apple read Dilger, MacDailyNews and listen to Rush Limbaugh and you will be all set.
Anal-ists have there heads up there asses all the time. They spit and spew what they think Apple should do by what other companies do and think that’s the only way Apple will make any money. Yet Apple proves them wrong every time and they still have there heads up there asses!
By now…people and the analysts themselves should be aware that what the analysts barks out is pure SHIT.