Dear Reader,
Apple reported profit of 11.249 billion USD of profit on revenue of 58.313 billion USD for the first quarter of 2020 compared to profit of 11.561 billion USD on revenue of 58.015 billion USD for the first quarter of 2019.
As can be seen there has been a marginal improvement on revenue. Actually these are very good results since in the first quarter of 2020 most Apple stores in China were closed for a period. So, in fact, Apples first quarter of 2020 results are quite good compared to what could have been expected.
However, I believe Apple is worth around 850 billion USD compared with Apple's current market capitalization of 1.29 trillion USD. Why do I think that? The world is in a coronavirus disease COVID-19 pandemic lockdown, so I doubt very much people are saving money to buy iPhones, Macs, iPads or the next application on the Apple store. In short, I expect Apple's revenue and respectively earnings to fall around 30% from current levels which should cause its stock price to fall circa 30% from current levels.
The money printing from the Federal Reserve and global central banks is distorting the prices of equity and fixed income securities. Instead of companies trading on their future earnings potential, companies are trading on the amount of cash chasing their securities. Blowing a bubble in an economic depression could end very badly.
This link on securities mispricing form the Financial Times is quite informative.
Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".
Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.
Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!
Respectfully yours,
Petar Posledovich
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