When will Apple hit $500/Share

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    Posted: 30 January 2012 12:30 AM

    WIth Apple reporting it’s rise in cash to $97.6B, I’d like to hear opinions (this is my first “new topic”) regarding the theory that Apple’s share price has been correlating closely with the amount of its cash on hand. Simply put, the theory now forecasts 5 times 97.6 = a share price of 488.
    Here’s a link to Asymco’s supportive data and discussion of the theory:
    http://www.asymco.com/2011/09/26/when-will-apples-share-price-reach-500/

    I don’t know why there might be a correlation, but I think if we see APPL trading in a 488 range until next earnings, the relationship becomes more ingrained in time. I welcome 488 this week, next week, any week soon.

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    Posted: 30 January 2012 12:31 AM #1

    http://www.macobserver.com/tmo/forums/viewthread/82068/

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    Full Disclosure:

    - Long Apple
    - Pro: Apple HDTV, iPhone Air, Stock split, Consumer robotics

         
  • Posted: 30 January 2012 12:39 AM #2

    jjjz - 30 January 2012 04:30 AM

    WIth Apple reporting it’s rise in cash to $97.6B, I’d like to hear opinions (this is my first “new topic”) regarding the theory that Apple’s share price has been correlating closely with the amount of its cash on hand. Simply put, the theory now forecasts 5 times 97.6 = a share price of 488.
    Here’s a link to Asymco’s supportive data and discussion of the theory:
    http://www.asymco.com/2011/09/26/when-will-apples-share-price-reach-500/

    I don’t know why there might be a correlation, but I think if we see APPL trading in a 488 range until next earnings, the relationship becomes more ingrained in time. I welcome 488 this week, next week, any week soon.

    I see it as simply coincidental.  As a new valuation theory for WS, it’s silly. 

    Never underestimate the desire to make sense of a stock with a senseless P/E.

         
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    Posted: 30 January 2012 12:50 AM #3

    My own silly theory is that we are now at a point, assuming all else to be about the same as it is now in the world, where AAPL almost cannot fall below a certain valuation.  Which to say it’s not a jet pack or booster rocket, more like a floor, safety net, maybe a slow-acting trampoline.

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    Posted: 30 January 2012 12:54 AM #4

    Mercel - 30 January 2012 04:39 AM
    jjjz - 30 January 2012 04:30 AM

    WIth Apple reporting it’s rise in cash to $97.6B, I’d like to hear opinions (this is my first “new topic”) regarding the theory that Apple’s share price has been correlating closely with the amount of its cash on hand. Simply put, the theory now forecasts 5 times 97.6 = a share price of 488.
    Here’s a link to Asymco’s supportive data and discussion of the theory:
    http://www.asymco.com/2011/09/26/when-will-apples-share-price-reach-500/

    I don’t know why there might be a correlation, but I think if we see APPL trading in a 488 range until next earnings, the relationship becomes more ingrained in time. I welcome 488 this week, next week, any week soon.

    I see it as simply coincidental.  As a new valuation theory for WS, it’s silly. 

    Never underestimate the desire to make sense of a stock with a senseless P/E.

    And never underestimate the pattern-recognition capabilities of an investor determined to find a reason his stock is going to go up.

    If APPL starts trading in a range of 5X Cash again this quarter, Mercel, would you start to give it more credence? How many quarters in a row before “coincidental” can no longer apply?

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    Study the natural order of things and work with it rather than against it…  ? Tao Te Ching

         
  • Posted: 30 January 2012 01:06 AM #5

    jjjz - 30 January 2012 04:54 AM
    Mercel - 30 January 2012 04:39 AM
    jjjz - 30 January 2012 04:30 AM

    WIth Apple reporting it’s rise in cash to $97.6B, I’d like to hear opinions (this is my first “new topic”) regarding the theory that Apple’s share price has been correlating closely with the amount of its cash on hand. Simply put, the theory now forecasts 5 times 97.6 = a share price of 488.
    Here’s a link to Asymco’s supportive data and discussion of the theory:
    http://www.asymco.com/2011/09/26/when-will-apples-share-price-reach-500/

    I don’t know why there might be a correlation, but I think if we see APPL trading in a 488 range until next earnings, the relationship becomes more ingrained in time. I welcome 488 this week, next week, any week soon.

    I see it as simply coincidental.  As a new valuation theory for WS, it’s silly. 

    Never underestimate the desire to make sense of a stock with a senseless P/E.

    And never underestimate the pattern-recognition capabilities of an investor determined to find a reason his stock is going to go up.

    If APPL starts trading in a range of 5X Cash again this quarter, Mercel, would you start to give it more credence? How many quarters in a row before “coincidental” can no longer apply?

    Well, the “5X Cash” theory should work for more than just Apple.  I mean, the idea ignores so many tenets of business valuation I don’t know where to begin.  If everyone agrees this is how Apple needs to be valued then it may become hard to ignore. But there’s lots of people who believe in astrology too, and it’s complete bunk.

         
  • Posted: 30 January 2012 01:10 AM #6

    Mav - 30 January 2012 04:50 AM

    My own silly theory is that we are now at a point, assuming all else to be about the same as it is now in the world, where AAPL almost cannot fall below a certain valuation.  Which to say it’s not a jet pack or booster rocket, more like a floor, safety net, maybe a slow-acting trampoline.

    Absolutely.  We are near the bedrock of AAPL valuation, terra firm that supports liftoff.

         
  • Posted: 30 January 2012 01:16 AM #7

    Post hoc ergo propter hoc - correlation does not nessisarily mean causation.
    I think that this is one if those correlations that people try to find. more like anomaly hunting.
    apples cash also correlates to the earrings - they are stashing it away very methodically with how much they make. so it makes sense that there could be some x times cash that coincides with the stock price. it all falls apart once they start spending it. I don’t buy it.

         
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    Posted: 30 January 2012 01:28 AM #8

    5x cash?  We’re at 4.3x cash now. 

    Not at Internet meme status for the 5x cash deal yet.  No “respectable” mainstream financial media outlet would dare propagate this time of theory on account of its patent lunacy. 

    Besides, if Apple adds another $12-13B in cash next earnings release, that’s a share price of 550+. wink

    Btw, it was fun to see the CNBC folks react in real time to Apple’s numbers.

    http://video.cnbc.com/gallery/?video=3000069167

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    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
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    Thanks, Steve.

         
  • Posted: 30 January 2012 11:05 PM #9

    What happens if Apple decides to start paying their cash out in dividends?

    Do the doors really blow open as the market (esp. funds) try to join the action?

    Or does the stock DROP, as people ironically fret about Apple not having as much cash on hand, and that dividends “are a sign of age”?

         
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    Posted: 30 January 2012 11:08 PM #10

    Welcome to AFB.

    I thought I heard somewhere that a stock somewhat “automatically” goes up upon an announcement of a dividend.  Didn’t bother to read to much into the why - if that phenomenon is actually “true” at all.

    As far as overall sentiment, people are running out of excuses to compress Apple’s valuation.  If this keeps up, at some point we’ll be trading at 3x cash.  Yeah, that would be a little ridiculous.

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    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
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    Posted: 31 January 2012 12:19 AM #11

    If Apple invested 20% of that $97B into new technologies or businesses to enhance their products or efficiencies, their stock would likely go up and the formula falls apart. But then it’s probably as likely to go down, as their is no visible evidence of reason to advances and declines these days. Plenty of companies are setting record earnings and their stocks do nothing. Just look at GE.

    I still think that $550/share will be hit in March of 2013. My simple analysis is based on these ridiculously simple assumptions. The market won’t change it’s growth rate drastically between now and then, and if you approximate a best fit straight line onto what Apple stock has done over the last three years, it hits $550 about the end of the 1st qtr of 2013.

    A less conservative approach looks at Apple’s growth since the middle of 2010. If you use that growth rate since mid 2010, it’ll hit about $585 in Mar 2013.

    That’d be nice. LOL

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    Posted: 31 January 2012 01:25 AM #12

    adamthompson3232 - 31 January 2012 05:10 AM

    I’m sticking with $500 per share by February 13th of this year.

    I vote with all limbs that you’re right.  $480 would be good enough for me.

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    Posted: 31 January 2012 01:30 AM #13

    I can’t bring myself to bet that crazy, although AAPL’s fire sale valuation can certainly handle it.

    GE’s not really all that comparable.  It has a multiple near 20, last quarter it surprised on EPS by less than 3%.  The whole year brought -2% revs decrease YOY and 19 or 22% $)$ increase in net income.  So GE’s multiple actually makes some kind of sense.

    http://www.ge.com/pdf/investors/events/01202012/ge_webcast_pressrelease_01202012.pdf

    Apple holds all the cards.  Apple is on the cusp of ubiquity in the mind of the market, which is slower on the uptake than tens of millions of consumers every quarter.

    Let’s see what happens when iPad 3 and iPhone 5 set new shockwaves through the competition, even though iPad 2 and iPhone 4S are cleaning up well enough on their own.

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    AFB Night Owl Team™
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    Posted: 31 January 2012 01:47 AM #14

    adamthompson3232 - 31 January 2012 05:39 AM

    Does “-2% revs decrease” mean +2% revs increase?:)

    Look, YOU try to say “an increase of -2%” and see if it makes sense.  Mr. Hypertechnical. raspberry

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    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
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    Posted: 31 January 2012 02:01 AM #15

    Apple beats consensus every quarter so that’s why their stock has been going, up yes I agree totally. But it goes up at about the rates I quoted. It’ll hit $500 in about 5 months. I’m not talking about a peak but maintaining it. Thinking that they’d blow away the consensus every time like they just did is wishful thinking. I hope they do (as a small stockholder), but predicting a steady growth at the rates they’ve demstrated seems more realistic. Their growth rate over the last 3 years has been phenomenal,- it’s up more than 70% in the last 20 months. Not sure that it will grow much faster than that.

    Not selling my stock any time soon

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