Apple’s trillion dollar iPhone

“Only Apple Inc. gets to decide what to charge for its new iPhone, but investors will get to decide what the new flagship is worth,” Dan Gallagher writes for The Wall Street Journal. “That could be a trillion-dollar question.”

“The market value of the world’s most valuable company already has surged 35% this year, to around $820 billion, ahead of Apple’s expected introduction of the new iPhones on Tuesday,” Gallagher writes. “That means the stock needs to gain another 22% — to about $193.70 — to get Apple’s market value to the $1 trillion mark. And, while its heavy dependence on the iPhone has made Apple’s stock rather cyclical over the last five years, the price tends to go up instead of down in the immediate months that follow a new launch of new devices.”

“Apple’s stock currently trades about 14.7 times 2018’s projected earnings, which is already on the high side of its 5-year range,” Gallagher writes. “A market cap of $1 trillion would represent nearly 18 times forward earnings based on current estimates, which is well above the stock’s peak multiple. Apple remains the cheapest of its Big Tech peers—especially when accounting for its $165 billion of net cash—so a strong iPhone cycle could give the stock some additional upside.”

Read more in the full article here.

MacDailyNews Take: Apple is undervalued as usual.

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  1. The analysts will try to tell us that all the good news has been baked in to the AAPL price, but any perceived drawback or negative aspect which can be blown out of all proportion would be the end of the world and AAPL would be punished as a result … and then rapidly be restored to where it was before and then climbing to new heights once people start seeing sense.

    Whatever happens, analysts will never get rich if they encourage people to buy and hold stocks like AAPL. There either has to be a reason to advise everybody to buy, or to advise everybody to sell and there are often times where different analysts are simultaneously advising buying or selling.

  2. Why all the hype, leaks, analysts projections etc…

    Tim Cook will calmly go on stage tomorrow at the new Steve Jobs Theatre, on the new Apple Inc. campus. He and his team will then no doubt confound all doom naysayers yet again (yawn!) & deliver to an expectant world a slew of new Apple products, including new iPhones being released in the 10th anniversary year of the iPhone.

    The analysts will claim “Its not enough, its boring, its late to the party” …. but guess what, you and I, together with 100’s of millions of normal users (including the analysts in secret) will crave ownership of this new slew of products out of the gate!

    Can’t wait!!

  3. I’ve seen a couple of articles saying that iPhone sales alone won’t pull Apple to a $1T market cap. I would think it depends on how many iPhones end up being sold over the next six months. To me, the value of a stock SHOULD depend upon how much revenue and profits a company makes. The problem is that Wall Street has different ideas about how to measure value. Wall Street could still complain about the iPhone’s declining market share percentage and continue to base Apple’s value on that metric. Wall Street can also complain about how the iPhone still remains Apple’s most valuable product by a huge margin and base Apple’s value on not having some other high-profit product.

    Wall Street can always find other ways to value a company that has nothing to do with revenue and profits. Look at Tesla’s high-flying share price and no profits at all. I think Tesla vehicles are absolutely fantastic but that still doesn’t justify the share price based on standard company financial fundamentals. I’m just using Tesla as an example of a company being highly valued for reasons other than revenue and profits.

    So, to me, Apple being able to reach $1T based on high iPhone sales isn’t actually a sure thing. Wall Street’s crooked value system makes it a crap shoot.

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