alt Hacker NewsThis is what’s all bad with us stocks and completely disconnected with market value: Revenue jumped 4x but market capitalization got inflated to 12x.
Replies
The price over earnings (arguably an imperfect, but better way to compare stock prices against each other than using pure revenue) for Apple has been fluctuating within about a factor of 2 for the last 20 years. Since before the iPhone, people were nervous about the possibility of sustained growth of profits of the company, and the P/E was similar to today. Once Apple started making a lot more money under Tim Cook, the price was at a relative discount becauee 10 years ago people were certain (but wrong) that this run would end soon and badly. The long term stability under Cook was truly impressive. Lets see what the markets think abiut the leadership change tomorrow, but probably this is not an immediate event.
Some of that is debasement, but some of that is that there is no other brand like Apple.
Would you not own stock of the most valuable brand in human history?
Yep. QE was a monumental mistake that killed economic mobility. Asset owners vs wage earners.
Do you think market cap should be proportional to revenue?
True, but also Apple is in a far more dominant position today.
Alongside Nvidia they essentially monopolize TSMCs entire latest generation chip supply.
That’s a moat in hardware that is going to get even stronger over time. Given this hardware moat they can dip their toes gently into the B2B market they’ve never really cared about and pick up another few hundred billion in high margin revenue over the next 10 years no problem.
I’ve always found it weird that Apple’s entire org runs on Mac but no other Fortune 500 company on earth does. Seems like an opportunity to nibble away at Microsoft.
Investors are forward-looking, though, so it just means that they think the future looks brighter than the immediate past.
The real disconnect IMO is TSLA.