“Apple (AAPL) had its best day in more than two years after the company reported quarterly earnings that were much better than analysts had expected. Expanding the shareholder capital return program echoes management’s confidence in stock’s valuation, reinforcing the multiple expansion narrative as well,” Nitin Gulati writes for Seekign Alpha. “By announcing a seven for one stock split, management is trying to shift the stock ownership toward less sophisticated individual investors and create more liquidity in the stock. In my opinion, the expansion of the capital return program combined with strong business fundamentals, increased investor participation and a growth catalyst (if announced) will form a feedback loop leading to a self-reinforcing “boom” phase in Apple stock again.”
“My fair value estimate for Apple hasn’t changed after the recent earnings release. Recent price action has led to the convergence of intrinsic value with the stock price. I think it’s right time to speculate on a long position in Apple. I continue to believe that above mentioned management actions and their consequences have marked the beginning of another bull run in Apple,” Gulati writes. “I continue to stay long in Apple through options markets. Having said that, investors should continue to look out for the build up of risks as expectations and reality divergences reach an extreme.”
Read more in the full article here.
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Is google not the most inflated bubble of them all?
Right there with Amazon.
Exactly. Apple never had a “bubble,” per se. When compared to Google and Amazon, it’s been undervalued, even at its height. On the contrary, the stock has been purposely beaten down to serve short term “investors” by a constant barrage of “the sky is falling, the sky is falling.” The beat down was never warranted — claims of lack of innovation, buttressed by time-lines that never existed in Steve Jobs’ ear, are blatantly false. It’s done to make money. Period. Nothing to do with the health of the company. These same naysayers will ride the stock back up, only to attempt to crash it once again during the next slow news period. I avoid the insanity and just hold my stock. Apple is a long-term investment.
IASSOTS:
management is trying to shift the stock ownership toward less sophisticated individual investors
As opposed to the manipulative rectal pores of Wall Nut Street who’ve been screwing over AAPL for the last year and a half? Just Shut Up.
…Investors should continue to look out for the build up of risks as expectations and reality divergences reach an extreme.
Which is ‘sophisticated’ blahblah pretending there EVER was an ‘Apple Bubble’. There wasn’t. Instead, there is currently a manipulated SUPPRESSION of AAPL’s value by dickheads like this guy, Nitin Gulati who drivels for Seeking Alpha.
Dime-A-Dozen anti-Apple FUD, as per usual. 😛
The “sophisticated” investors ownership period is microseconds. The split will reduce the B/A spread and cut into the HFT and option traders profit potential.
I’d like that!
It’s Seeking Alpha. Amateurs.
Yes, bubble! Run away, be very afraid. There are no fundamentals to back up this AAPL price increase. Don’t reason it out, just panic.
Think you needed to add the somewhat obvious /s 🙂
How do you dismiss a legitimate rise in Apple’s stock? Dismiss it as a “bubble.”
Oh, it’s S.A. Never mind…
Apple’s next bubble will be made of sapphire.
With a PE of 12 this is NOT a bubble. Good try but this stock is going to 700 non-stop right after the split…… at 150 a share times 7 thats over 1000 at todays price. Is this stock a buy? Depends how much money you want to make.
AAPL has been artificially held down by Wall Street and analysts, but when reality kicks in and AAPL starts moving to a more realistic valuation based on the fundamentals and it’s future prospects, it declared to be a bubble !
The reality is that AAPL was the opposite of a bubble. It was a highly buoyant object that was being held down. If you’ve ever tried to hold an inflated beach ball underwater, you will recall that there comes a time when it can no longer be held under and it rushes up to the top.