(Apple Earnings) * 2 = Facebook Valuation
by markettamer - March 11th, 2012 9:41 am
Special thanks to Phil Davis for his contributions to this article.
Maybe a half trillion dollar market capitalization is the stumbling block, but it's sometimes hard to rationalize that Apple is truly valued at $508Bn today.
Delving into the details, some startling figures appear.
First, let's look to the widely cited metric of price-to-earnings. Apple has a forward P/E of just 11, which is by no means expensive.
In fact, digging into those earnings, we see a figure of $13,000,000,000. That's nine zeroes after the 13, and it's not a mistake, nor is it an annual figure. That's 13 billion dollars for a single quarter.
Now seasonality is a big factor in earnings but Apple is still projected to grow this year, which means the $45Bn EBITDA for the trailing twelve months should be substantially surpassed in the coming twelve months.
The story of Apple is not limited to Apple of course. It's massive market capitalization didn't just come from its own success, but also from cannibalizing competitors, most notably Research in Motion.
Remember when RIMM was valued over 6 times greater than what it is valued at today? That was just 24 months ago. $50Bn of valuation lost on RIMM. $50Bn of valuation gained by Apple.
Some might say the Apple story is ending. As iPod sales, the flagship product, just a few years ago dwindle, maybe the same will happen iPhones and iPads?
But wait.
iPod sales had just one connected recurring revenue stream: iTunes. The iPhone has more than iTunes; it has the addictive nature of cell phones in general which means the monthly charges Apple enjoys from the subscription service have greater lifetime value. And iPads don't necessarily cannibalize iPhones like iPhones cannibalized iPods. Statistics on iPad usage show a huge number of users rely on iPads for reading and game-playing at night while lying in bed, when phone usage is considerably lower.
And then there's Search. Siri is just the beginning of what Apple will do to fundamentally disrupt search. Each customer will be enabled with a virtual assistant through Siri. It's a game-changer in the world of search in years to come that Google is already threatened by.
And there's iCloud. The Dropbox founders didn't take the deal from Jobs to be bought out, and so Apple created iCloud, which is better. It's more than file-sharing and synchronizing. Imagine downloading a file…
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DiggCan One Company Transform The Jobs Market?
by markettamer - April 17th, 2011 3:24 pm
The Bureau of Labor Statistics reported on April 1, 2011 that the unemployment rate was little changed at 8.8%. It is no secret that when factoring in underemployed and discouraged workers, the true unemployment rate is approximately twice the headline figure currently. Politicians will try to ignore the fact, media will try to sensationalize the fact, job-seekers will despise the fact, but one company might just be taking a pioneering and bold step by daring to improve labor market efficiency one person at a time.
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London Riots, Nuclear Meltdown, Euro Risk and Markets… Rally?!
by markettamer - March 27th, 2011 6:47 pm
Protests in London, Japan Nuclear Meltdown, Euro currency risk and the market is… rallying?
Long In The Tooth Rally
by markettamer - March 7th, 2011 1:41 am
Asia down overnight, futures down, euro rate hike…. rather than rehash it all, let’s get to the bottom of line of picks and performance!
Was Friday’s Price Action a Fool’s Bounce?
by markettamer - February 26th, 2011 1:20 pm
The indexes are currently forming a "Bear Flag" bearish continuation pattern and although Friday’s price action was very bullish, I don’t feel that we are done moving down. Watch for the indexes to test support 5-6% below the recent high.
Bullish But Cautious
by markettamer - February 19th, 2011 12:42 pm
We continue to move higher and I continue to be bullish. We are currently at a key resistance level in the Compq and we are testing the closing high from October 2007 at 2834. We are also about 29 points away from the trading high at 2862 in that index. The levels that we need to take note of on the DOW, the SPX and the Compq are the 20 simple moving average and the prominent trend line that has been in place since September. If those key areas are breached, that could be significant and the beginning of a possible short term pullback. Stay nimble and it wouldn’t be a bad thing to consider a hedge
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
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