Even after the recent slump in market capitalisation Apple Inc is very overvalued.
I would disagree with Warren Buffett. Apple’s intrinsic value is 1.9 trillion USD, compared with Apple’s current 2.77 trillion market capitalisation, according to Wolfteam Ltd.
Even absent a China Taiwan conflict, market participants seem to be having too high expectations for revenue growth and assume Apple will keep its 25 % + net profit margin and even will be able to increase its profitability.
According to Wolfteam, the current lack of growth, even slump in smart phone sales will weigh on Apple. Apple is trying to win a larger market share, but from a stagnant pie.
Apple is relying on App Store services revenue to drive revenue and profits. Yes, growth can be squeezed out of services, but the smartphone saturation points to even there a trough in services growth for Apple.
All in all, absent a technological breakthrough product, Apple will slowly turn into a utility. Be it a technological one.
And Apple will have technology utility Price/Earnings, Price/Sales and Price/Book multiples, 35 % lower than Apple’s current ones, according to Wolfteam Ltd.’s projections and comparables estimates.
And Apple will still store trillions of USD of investments value and start paying a 2 % to 4 % yearly dividend yield. And that is what Warren Buffett is banking on is Wolfteam Ltd.’s view.
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