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Apple's earnings top estimates: YOLO or FOMO?
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joined discussion01/06/2022 17:18

$Apple(AAPL.US)$ No doubt AAPL is a solid investment. as I've been a M...

$Apple(AAPL.US)$ No doubt AAPL is a solid investment. as I've been a Mac user since 1996 and shareholder since 2001; Apple has always had the competitive advantage by light years and it was obvious to what was a small number of users back in the day. It was a superior platform from the ground-up, but the market chose PC's and laughed Steve Jobs off the stage. Go back to when the iPhone was originally one took it seriously and deemed it "too expensive". We were branded as "fanboys" and told to go play Oregon Trail because that's all Macs were good for back in 5th grade.

The reality is that we were the adults in the room who realized a good product and company management when we saw it and the innate bias that the financial analysts (typically non-creative, business-types) had over this company. In their minds, Apple is a beat away from doom and gloom. You will see this at the next "misstep" and how hard and fast AAPL gets unloaded. When iPhone growth "peaked" a few years ago, you could just tell it was the moment they were all waiting for. The inflection point of Apple's demise.

As I've said in other posts, look at the P/E history for this company for the past decade and you'll see throughout its growth to being the most valuable company by far, it rarely ventured above 20. It was treated as a value stock and the market completely misunderstood Jobs and his vision, and it's carried forward through the phenomenal Cook years.

I also blame the accounting rule somewhat too. The handset revenue has to be recognized over two years, which mutes the EPS that everyone relies on but rakes in the cash flow, which is why Apple amasses so much cash relative to the stock's P/E. It's a cash cow.

To us, yes, the stock should be at $4T or more...pick a number. But the market makers aren't going to let us get there easily. Tesla, on the other hand, gets a P/E of 370 after becoming profitable for a few quarters. No knock on Musk, I think what he's doing with Tesla and SpaceX is amazing and sorely overdue so I'm not picking on him at all, only to make the point that the market bias on AAPL is just insane.
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