Dear Reader,
At 50 bln. USD for the fiscal fourth quarter of 2020 Apple reported slightly lower revenue than the comparable fiscal fourth quarter of 2019 when revenue was 51.5 bln. USD.
The main reason is the postponement of the launch in stores of iPhone 12. However, Apple's just reported results are not stellar anyway. Yes, Apple's net profit margin remains high at circa 25.27 %, but Apple seems to have reached peak sales currently. Apparently the coronavirus pandemic is starting slowly to take its toll on consumers and they balk at buying large ticket items like iPhones and Macs. Yes, it is clear that the digital transformation will be accelerated because of the coronavirus, but still consumers have to earn money from somewhere to buy personal computers, tablets and mobile phones. The tourism, hospitality and travel industries have been decimated all over the globe and this deprives many consumers from income with which to buy Apples' hardware products. Which basically means the replacement cycle for Apple's iPhones, Macs and iPads will become longer.
Currently Apple is valued at 1.85 trillion by public markets. I estimate that is peak valuation for Apple currently. Apple's current stock market value could only be justified by its huge profit margin. For the next 3 years Apple will have to grow into this valuation. Yes, Apple's stock price could still overshoot even more or undershoot if a new lockdown provokes indiscriminate selling. But as long as there is no vaccine, the coronavirus is bound to take its toll on the economy and on Apple's sales. Apple even at this level looks overvalued.
Today, at 31 October 2020, I think Apple's is worth around 1.37 trillion USD. In 3 to 4 years Apple may well earn enough money to grow into its current public market valuation of 1.85 trillion USD.
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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