Enormous Apple market cap swells and swells ... like a bubble
Software-reskinning box designer 'worth' $586 beeellion
Apple's total share value pushed beyond the totemic $500 billion mark it reached two weeks ago to hit a heady $542 billion in trading this morning. That made the iPad seller worth more than the entire American Retail Sector, as defined by the Standard & Poor's survey of the top 500 American retailers.
Graph via ZeroHedge
Apple shares were selling at $586 apiece at time of writing. The bump clearly came from the retail launch of the third iPad today, but does highlight Apple's reliance on just two products: the iPad and the iPhone. ®
Let's not forget that the iPad is less than 2 years old. Saying that Apple depends on a relatively new product means nothing, unless you are suggesting that they will not produce anything else new.
Moreover, any other company would kill to have the income from any of the other products Apple sells. That the iPad dwarfs them all does not mean that Apple would not be able to survive without it. After all, it did survive before the iPhone and the iPad, and in fact it brought itself back from the brink of bankruptcy before even the iPod.
So, Apple "relies" on the iPad today as much as it "relied" on the iPhone before it, and the iPod before that, and the Macs before them all. It has always relied on the products it just happens to be selling at the time.
Many people think Apple is cheap - until their recent rise their market capitalisation was just 9 times their earnings (excluding the cash they hold) or about 12-13x including it. As a comparison I think Amazon are trading at around 90 times (or more) of earnings - so are Apple cheap or Amazon expensive? A few years ago (when they were making less money) they were trading at about 30x earnings - so are they really expensive now??
People say it's a bubble - but they are making real products and real profits and real cash - at their earnings ratio they trade on a valuation more like a fairly static business (like a supermarket) not a tech company with a market that is rapidly growing.
As the reg said in another article the tablet market is due to grow over 50% this year and Apple have the vast majority of it (certainly by value). Many people are actually buying the iPad 2 now it is a bit cheaper - putting the squeeze on other-brand tablets. They sell a lot of iPhones but their share of total phones shipped is not that great (as a lot of people have not moved to smartphones - yet). More iPhones and iPads shipped = more iTunes users and revenue from that and the App Store. Then there are new products rumoured for later this year - maybe another iPad, a new iPhone, a subscription 'media' service??
I would be more worried if they were trading at a very high earnings ratio - but they are not. I would be worried if the markets they were in were stagnant - but they are not.
Re: Apple are successful and that isn't going to change soon
Obviously because their growth has been massive over the last 10 years, the market seems to think they can keep it up, it will be funny when they're wrong.