Dear Reader,
Apple's future looks bright. Apple does not any more break out numbers for iPhone, iPad and Mac sales, but it seems during the coronavirus pandemic people bought ought Apple's phones, tablets and computers to study, work and communicate with others.
Personally, I bet iPad sales did really well since many students and children at schools snapped up iPads to study remotely. Students at colleges must have also bought many Macs laptops to study better remotely.
This is great news for Apple. Apple has long dreamed of getting a larger share of the ultimate platform - the personal computer. Through iPads Apple has been trying to circumvent personal computers or at least make better alternative inroads into the personal computer market. Apple has also been trying to sell its App Store and Apple Music services which depends heavily on selling more hardware. So, all in all, last quarter brought great news for apple.
So is Apple fairly valued? At 1.84 trillion USD current valuation I estimate Apple is grossly overvalued. In my opinion the intrinsic worth of Apple is around 1.2 trillion USD even if Apple continues to sells its hardware at a brisk pace in the next couple of years. The market is pricing just too much future potential profits and revenue that will flow to Apple. Smartphone and tablet unit sales globally have been in decline for the past several years. Personal computer sales have predominantly stalled or declined in the last decade.
So the usual revenue streams of Apple do not seem very promising. Actually, I think behavioral finance is here at play. Consumers look up and dream of Apple's products. Individual investors extrapolate that feeling into owning Apple's stock. Much like Ferrari and Tesla are trading at many times higher Price/Sales multiples than Volkswagen, Toyota or even BMW. What is more Apple's stock price growth keeps index tracking funds funds flows coming into Apple's stock which even further raises Apple's stock price.
In short, I think Apple's is worth 1.2 trillion USD. But Apple is a fantastic company, which I think will continue to thrive in the mid-term. Apple's future looks bright.
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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