Morgan Stanley analyst Katy Huberty says that strengthening iPhone and iPad sales data runs counter to Apple’s recent stock performance. Huberty points to supply chain data points which suggest healthy iPhone demand and potential upside to Morgan Stanley’s June quarter iPhone forecast. Apple’s supply chain in Taiwan saw sales increase 13% Y/Y in April, according to the analyst, which is the seventh consecutive month of Y/Y revenue growth following the launch of iPhone 12 family.
Philip Elmer-DeWitt for Apple 3.0:
From a note to clients that landed on my desktop Wednesday:
Our Asia supply chain team recently raised their June quarter iPhone build forecast to 44.5M up from 43.0M due to stronger than expected demand for iPhone 12 Pro Max. We currently forecast 41M units, ~3M units below what is implied by the historical relationship between iPhone builds and shipments (44.3M) (9).
The team also raised their iPad build forecast to 16.8M up from 16.0M previously. We forecast 13.5M iPad shipments compared to the 17.6M implied by the builds, given expected supply constraints…
While we need to watch App Store growth over the coming months, we believe Apple’s recent underperformance is likely overdone (-6.5% since earnings vs. the S&P 500 -0.5%) given the improving iPhone and iPad data points.
MacDailyNews Take: As we’ve long maintained, Apple stock remains significantly undervalued. It’s almost as if people can’t quite wrap their minds around Apple’s revenue generation capacity or allow themselves to believe that it will continue to grow for the foreseeable future and, very likely, well beyond.
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 — until and unless they sell.
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 nothing more than 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.
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Stop copy-pasting your old comments Steve, start a blog and post your stale essays there.
Bonds are the dog and stocks are the tail. Bond rates are profoundly affected by inflation and make debt service a challenging reality. The US has A LOT hanging on this scenario. We have not seen the last of this, regardless of AAPL’s earnings health.
the beatings will continue until morale improves
Just one person’s opinion, but not the only voicing challenge to tech.
Let the share price stay low. I hope more of the cowardly Apple shareholders dump their Apple stock so Apple can buy back as many shares as possible at a lower price. It makes no sense for the share price to go up any higher as long as Apple has plenty of cash to buy back shares. I’m not going to be selling my Apple stock anytime soon, so if the share price goes even lower than $120, it doesn’t matter to me. There seems to be a general lack of confidence in Apple’s growth although I’m not entirely certain why. However, I’m not going to lose sleep over it. I think Apple’s doing as well as can be and if the institutional investors don’t appreciate that, then they’re just overly greedy.
Share buy backs do nothing for the shareholder but instead incinerate cash. Apple spent 60 billion dollars on buy backs last year. That did nothing, absolutely nothing, to stop the massive plunge in AAPL during 2021. All that money incinerated. Gone. Forever. No value added to Apple or to the shareholders.
Dividends once given are retained and cannot be swallowed up by a skittish market. Apple would rather incinerate cash than return it to the people who actually own the company.