“As Apple’s market cap approaches $1T, it begs the question; can shares move higher? At Loup Ventures we do believe the Apple story is well positioned for future appreciation based on a longer-term, more sustainable investing paradigm,” Gene Munster writes for Loup Ventures. “The recent move higher in shares of AAPL is likely an early reflection of this emerging paradigm shift.”
“About every 10 years, there is a new paradigm that drives investor thinking on the Apple story. It started with the growth of the Mac (’80-’85), then post-Jobs and competition from the PC (’85-’97), then the iPod along with its halo effect which increased Mac market share (’01-’06), and most recently, the iPhone (’07-present),” Munster writes. “We define the next paradigm as Apple as a Service.”
Munster writes, “The Apple as a Service paradigm will not need a super cycle for the Apple story to remain favorable with investors.”
Read more in the full article here.
MacDailyNews Take: As we wrote last August:
Apple’s services business is an unstoppable locomotive that, someday, even Mr. Market might fairly value.
SEE ALSO:
Apple Services: The nitrous in Cupertino’s profit engine – November 27, 2017
Inside Apple’s massive services results – August 9, 2017
Misunderstanding Apple Services – August 7, 2017
Dispelling the Apple Services myth – May 3, 2017
Apple’s Services business: $7 billion in revenue last quarter alone – May 3, 2017
Apple’s Services (App Store, Apple Music, Apple Pay) business is an unstoppable juggernaut that’s still just gathering strength – May 3, 2017
Stock Market 101: Wall Street doesn’t control, decide or “set” the price of a stock. Nor does it “reflect” the state of the economy, let alone the state of any company represented.
For example, the success of Apple (or lack thereof) has no direct effect on the price of Apple’s stock. Rather, when traders are (in general) more interested in selling it than buying it, the price of a stock declines. The opposite is also true.
If you “Play” the stock market (trade) you quickly discover the only way to make money on a rising stock is to be among the first to buy it (when it is still low). And the only way to avoid losing money on a declining stock is to be among the first to sell it (when it is still high). The net result, folks, is traders don’t watch the company behind the stock. They are watching each other. If a few start selling a stock, the rest rush to sell it, too. If they hear some news (or some analyst’s comments) that they think will cause other traders to react, they will try to be among the first to so react. Thus they become a self-fulfilling prophecy.
Investors, on the other hand, are interested in the company. They buy and hold for the long term. For them, it’s a savings account with (hopefully) a better return. But because of this, Investors don’t influence price changes in any way.
Wall Street is not smart, stupid or clueless. People who cry, “They just don’t understand Apple,” don’t understand the market. It’s a mob-mentality, pure & simple. They don’t care about you, me or Apple. They only care about each other and any “skill” they may have is simply the ability to predict what other traders might do before they do it.
In other words, “traders” are like sheep… If a few suddenly start to run, they all run and in the same direction. Only afterward will analysts attempt to figure out why.
What’s the solution for Apple? Minimize their reliance/exposure to traders. So, you begin share buy-backs and bond issues – with an eye toward reducing your risk (from traders) or perhaps one day eliminating it! (Get out of the stock market and go private. All they’d really need is lots of money to fund themselves! Hmmm.)
I’ll get off my soap-box, now.
while helpful your academic explanation falls short, in your world over time stock prices would would on average over time stay relatively flat, however greed eventually wins out and stock prices rise substantially over time
I was with you until your comment suggesting Apple could use its cash hoard to buy down all its stock and “go private.” That’s shareholder cash, and as buybacks increase, reducing the number of outstanding shares, that increases the value of each publicly held share. The only way to return to private ownership would be for non-Apple cash to be used to purchase the company, and that would cost someone/some group of someones more than a trillion dollars at today’s capitalization to buy out those public shareholders. So, it’s not going to happen.
It’s not shareholder cash.
Dr. Billy, your post made a lot of sense until you started talking about Apple taking itself private. That is nonsense to anyone who truly understands how corporations work.
So dumb. This so-called paradigm shift isn’t new or something unearthed by Munster. It’s been obvious to anyone who has been watching Apple over the past few years.
a self-inflated story from a VC firm trying to stay in the news
Thanks for making a distinction between traders and investors, the former would be microtraders while the latter would be Warren Buffet I am guessing. And I am guessing that you are pointing to Dell who went private.
The only “emerging paradigm shift” (’18-future) that peaks my interest is Cook reassigned to COO and bring in a tech savvy CEO that can take Apple further in the future. Gene is pegging it all on “services.” Yeah, like the Apple TV, skinny bundle channel service and Project Titan. Present day Siri redux, HomePod, Apple News, right …