Can Apple Shares Keep Defying Gravity?
by Kara Swisher
Posted on September 28, 2009 at 11:38 AM PT
Since the beginning of the year, Apple shares have more than doubled from $90.75 on Jan. 2 to almost $186 today.
Google (GOOG) has done about half that performance, while Microsoft (MSFT) has done one-third. (See the chart below; click on it to make it larger.)
But that’s apparently not enough, according to Thomas Weisel analyst Doug Reid, who has raised his price target on Apple (AAPL) stock to $210 from $180 a share.
Citing higher sales and profit estimates, healthy demand and the iPhone headed to China–and the launch of a cheaper $800 MacBook soon–Reid wrote, “We believe there is a high likelihood Apple will fortify its entry into the holiday season and that such a move will be a positive for AAPL shares.”
While this all makes sense, one wonders if the froth can reach that level.
In any case, perhaps what is more interesting is the $166.4 billion market cap for Apple, which is well below Microsoft at $232 billion.
But it is well above Hewlett-Packard (HPQ) at $113.4 billion, Google at $158 billion, Dell (DELL) at $30.6 billion and Palm (PALM) at a paltry $2.4 billion.
With that kind of massive valuation and a pile of it in cash, perhaps the better question is what Apple will do with its soaring stock.
Oddly enough, Idina Menzel and Kristin Chenoweth singing the big number, “Defying Gravity,” in the musical, “Wicked,” sound a lot like they are channeling Apple’s corporate mantra these days.
Witness:
Comments
I think the stock is where it should be, after being smacked along with the crash (mutual funds sold good stocks to raise cash to pay for the losses). The “March lows” may not be as relevant as many think.
AAPL will always be volatile, as it is heavily traded, but I believe this is a $1000 stock in 10 years, because of:
-growing Mac market share gains
Posted by Frank Cioffi at September 28th, 2009 at 11:50 am-iPhone is just getting started
-devices we are not yet aware of
i can’t but wonder what the intent of this piece is.
just what, may i ask is the purpose of printing such a biased negative view? just what is your motive?
for surely, if there was to be any semblance of ‘fair’ reporting, you would have looked at and tried to understand the elements behind the stock price. no, instead you just state it as defying gravity.
you fail to mention that that the stock price has merely recovered the ground it has lost since its peak in jan 08.
indeed, the other companies you compare apple’s price to, are mostly recovering. only slower. there are many good reasons why this is so. could it be that this largely reflects the fact that apple is weathering the economic downturn comparatively better and is poised for further growth?
apple is in the enviable position,of being THE company all others want to imitate. and sadly, that is all they do -imitate, rather than innovate. (despicable).
apple, through innovation, best marketing, best product design, best retailing, best customer support, best business plan, best cost structure, best execution… has become one of the worlds most admired companies. an exclusive, high growth brand, with deservedly high margins and phenomenal cash generation.
you make mention of your bewilderment -” if the froth can reach that level”- ie, apple’s ‘already high’ shares attaining $210 vs $186 today. this 25% increment is negligible, particularly in the context of current unpredictable market swings. the relevant question is whether apple can double in the next 18 months.
i question, from your perfunctory attempt at value analysis, whether you should curtail your economic refections and concentrate on technical digital reporting, which i assume to be your forte.
again, your piece is not about fair reporting, it is a biased, one-sided opinion and i cannot but enquire as to what lies behind it and what your motives may indeed be.
Posted by jeff shore at September 28th, 2009 at 4:34 pmerrata:
sorry, please read 12% as being the difference in price between $186 and $ 210 in para 7.
Posted by jeff shore at September 28th, 2009 at 5:03 pmThere is no analysis here of the valuation. The stock has recovered to its pre-recession range, which is hardly surprising, given the outstanding performance it has had in the midst of the recession, particularly relative to its comparables. Also, posting a youtube video that has more to do with your headline than it has to do with the company you are discussing does not count as supporting evidence for your argument.
While I don’t question your motives, and assume you are trying to contribute, this is a schlock piece, and is not worthy of the wall street journal.
The U.S. stock market, taking the long-term view, has continued to rise for two centuries. How long can it “defy gravity?”
Posted by Scott Stornetta at September 28th, 2009 at 5:28 pmJeff wrote: “just what, may i ask is the purpose of printing such a biased negative view?”
Kara Swisher worships at temple Microsoft, as does all every one here at All Things D.
Posted by Lenny Pudinskaya at September 29th, 2009 at 1:16 amApple is the hated enemy of all Microsoft egoists.