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AAPL over $1000 - How?
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I fully well know that trying to predict where a stock is going to go is hard enough in the short term (next 12 months) let alone where it will be in the next say 3 to 5 years. However, that doesn’t mean it can’t be insightful (and fun!) to give it a go.
I was therefore wondering what does everyone think it will take to push AAPL above $1000 per share - mkt cap: ~$930bn.
I definitely think there is enough steam to take us to $450 (as per DT) and well on into $500 in due course. But, after that?
The thing that worries me is that there is only so much spent by the worlds consumers and businesses on technology per year. Short of this increasing dramatically (which I think it will, perhaps not dramatically, but there will be an ever increasing amount of our disposable incomes spent on tech/gadgets), there is only so much profit to be made in the industry. Yes there is plenty more growth out there, but how much more?
Even if Apple were selling 200m iPhones a year, say 75m iPads a year, say 75m iPods, and another 40m to 50m desktops and laptops, chuck in around 30m Apple TV’s, how far would this get in terms of EPS? Would it take us anywhere near to achieving $1000 per share? I have of course omitted new products as clearly this is impossible to predict!
My questions are of course pretty hard to answer with any degree of certainty, however, I would love to hear everyone’s thoughts on the topic, given most of us here are in for the long haul with AAPL.
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I think that breaking the $300 level is significant psychologically, momentum and all of that.
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Earnings growth is part of it. Another is this formula: Economic recovery + Market euphoria = PE expansion.
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Jonathan, the quick answer. No.
The higher AAPL goes up, the range of P/E goes down. Don’t forget that the ipod is a flat product. The Macs are where the real money is, but it just seems to me that Apple is trying to steer people away from traditional computers. 40 mil computers would be 50 bil in rev for a year and would still have us no where near the goal. I am curious as to what kind of P/E you would think AAPL would bring at say $800/sh, my guess would be around 8-9. The sales just don’t add up.
Percentage wise we are “only” 33% away from $400/sh, but the overall market must stay health for that to happen. There was someone who used to post here long ago that used to claim that Apple was recession proof, that did not work out to well.
Stay vigilant. :innocent:
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mbeauch,
Have you accounted for the devaluation of fiat money? Every government is printing money. Present value of a $100 10 years from now could be worth only $10.
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I was therefore wondering what does everyone think it will take to push AAPL above $1000 per share - mkt cap: ~$930bn.
I would argue three things:
1) Substantial gains in global market share (think Asia) in its three viable product lines; a) laptops (PCs), b) iPhones, c) iPads
2) Continued innovation not only in these three lines, but in new products and services (e.g. cloud-based entertainment and productivity services)
3) Time. Going from circa $300/share to $1000 in near term under these economic conditions is fanciful for a tech company. This is not precious metals. Investors have to be convinced of continued performance, and only incrementally, in my view, will its stock break past $500, let alone higher.
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wab95
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@MBeauch - I alas have to agree. Sadly I think AAPL won’t be able to go much higher than $600 per share (in the near term, say 2/3+ years). P/E compression will clearly put a cap on this.
One argument in favour though is that if you compare say AAPL to XOM on an enterprise value basis, AAPL is quite a bit smaller than its $275bn market cap would suggest. The real value of AAPL is an EV of ~$225bn given the ~$50bn in cash on the balance sheet.
So perhaps lets say, what will it take to make AAPL worth $1000 per share, or say have an EV of $730bn (assuming it has $200bn of cash on the balance sheet)? The answer is probably a hugely unrealistic amount of products sold per annum…
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@MBeauch - I alas have to agree. Sadly I think AAPL won’t be able to go much higher than $600 per share (in the near term, say 2/3+ years). P/E compression will clearly put a cap on this.
One argument in favour though is that if you compare say AAPL to XOM on an enterprise value basis, AAPL is quite a bit smaller than its $275bn market cap would suggest. The real value of AAPL is an EV of ~$225bn given the ~$50bn in cash on the balance sheet.
So perhaps lets say, what will it take to make AAPL worth $1000 per share, or say have an EV of $730bn (assuming it has $200bn of cash on the balance sheet)? The answer is probably a hugely unrealistic amount of products sold per annum…
Exactly.
The last time I looked, Apple was not even in the top 50 in sales rev. This of course is going to change rapidly. The next year is going to be the mother of all years it looks like. Apple is on track to go to $100 bil in sales next year, simply astonishing. Lets not even get started on the cash reserves, happy day remember. 
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As a 13 year investor in AAPL, I have been disappointed repeatedly through the years, and tend to be extremely skeptical about AAPL $1,000 predictions. A consumer products business can quickly fall out of favor or can be blindsided by a completely new technology. Be careful (says the guy who has half of his savings invested in a fruit company!).
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Most people, especially stock analysts, base their projections on the predicted trajectory of Apple’s existing and imminent products.
And yet Apple’s growth, if you look at the last 10 years, was driven by the creation of new markets and new products. Not the expansion of existing markets and products.
So predicting Apple’s stock price on the basis of predicted sales and profitability of Macs, iPods, iPhones and iPads (the existing product lines) is a glaringly under-informed exercise.
We don’t know if Apple will be able to continue on its pace of introducing market pioneering products every three or four years. We can only have faith or lack thereof about whether Apple has perfected an innovation factory that guarantees the continued introduction of revolutionary products.
If you believe in Apple’s innovation factory like I do, then you stay invested with the expectation that we don’t know what the future products will be but we are confident that they will continue to be mind-bogglingly successful and that AAPL will continue close to the same trajectory that had it rise from 45 in 2005 to 300 today.
But if you don’t believe in Apple’s continued success in innovation then you bail out now.
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@aardman - absolutely agree. Although, as I said above, I think AAPL up to $600 is possible in fairly short order. One can still double their money. It’s just going to be a lot harder to make any more than that through AAPL… The years of triple digit gains are behind us. It is a sad fact that I am finally coming to grips with!
I also like the other thread regarding AAPL at $1000. The first posts back in 2007 had no mention of iPad’s (obviously). This is all part of the fact that 3 years ago Apple’s two most important products didn’t even exist. Astounding.
All of this is certainly the reason why I am sticking in AAPL for at least the next 12 to 18 months. I will surely reassess my position then (and almost everyday in between!).
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Increased market share in both phones and computers + new products.
The increased market share will be driven by penetration into the enterprise.
Anyone remember Richard Brautigan’s book: Rommel Drives Deep into Egypt?
The enterprise story will be titled “Apple Drives Deep into the Enterprise.
Add rapid growth in the enterprise market to the consumer market and…...
Does Apple get to $47 a share in earnings?
That might support $1000 a share.
I dunno.
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Never. It’ll spilt far before that.
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I can certainly see it going to 1,000. Thats 3.3 fold higher than where AAPL is now. With whole hospitals, car companies, police forces, military etc already starting to order thousands of iPads, think of where those numbers will go. As pointed out, AAPL has only just touched the parts of the world where growth is becoming or will become exponential. Then there will be phones, touches and other versions of these touch screen multi-purpose devices with tremendous room for growth. I believe these will become must have items for virtually everyone on the planet. Big things are going to happen with TVs and home entertainment as well. Apple is poised to integrate all sorts of things that nobody else can or can imagine. With that kind of breadth, presence and reputation, their high power, high end systems will also become increasingly adopted by industry, universities, schools, government and police/military. Every kid I know now has and wants Mac products. This wasn’t the case even a few years ago, and unheard of 5-7 yrs ago. Bottom line: I see exponential growth for another 3-4 yrs. Lets see what they come up with in the meantime. I see no reason to think that they won’t continue to see the future and its opportunities in a way that only AAPL can. Even if Steve has to step down, his vision and ways of thinking are now well ingrained in the company, and I think the others at the top share much of his vision, intelligence and road map. I’ve been all in for about 8 yrs now, and see no reason to change my thinking. Many times over that period people wondered how AAPL could possibly continue to grow at similar rates. All along though, it was easy to see where the next doubling or tripling of sales and market share would come from.
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AAPL $1000 is far too early to call.
I find it unlikely at this point. Apple would need to be a $200-ish billion company that’s still growing at a rate somewhat comparable to now (note the low P/E the market gives AAPL even now). By then, the “Apple can’t grow at this rate forever” chanting will be deafening, and P/E compression for megacompanies would have kicked in as well because the market disrespects AAPL and doesn’t appreciate the company’s strategy and evergreen profitability. The market will not make a special case for a special company, because said company is Apple.
We’ll get well over $400 if things continue as they are, but $1000 just isn’t looking likely right now. Look for Apple to be at the $350-400 billion revs level, making $80 billion a year in earnings (P/E of 12 or so), and still growing at a nice clip, before that happens.
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As potential growth levels off (if ever) I think we begin to see a dividend. One-offs at first, then regularly.
