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Apple at $1000/share? Oh, at LEAST!

Tim Knight from Slope of Hope's picture




 

 

(Note - I got an invitation from Tyler this morning to contribute to ZeroHedge, which completely made my day. I've got a little blog called the Slope of Hope, wrapping up its 7th year. I hope to become a regular here over at ZH; thanks, Tyler!)

Most of you have probably already seen the bullgasm happening over at Barron's. 

Nothing sums up the euphoria these days better than Apple, Inc. The stock is up nearly 40,000% since 1982 and, more recently, is up about 500% over the past three years. The company seems unable to do wrong (unlike, say, its former arch-rival RIMM), and the media is awash in predictions of the stock reaching $1,000 per share. There doesn't seem to be much basis for this except that it is a Big Round Number, which also would make Apple's market cap an Oh-So-Round trillion bucks.

Now let me make clear I am no Apple-basher. Anyone who knows anything about my background knows I have been an Apple fan since the early 1980s. My first Macintosh was purchased in early 1984; I got my first iPhone (the first of many) on its introduction day (which I chronicled with this video), and my first iPad on its debut day. I'm not one of the crazies that waits in line for four days; I simply show up later in the day, pay for it, and resume with my life.

My fondness for Steve Jobs is well known too. A simple query on YouTube for "Tim Knight Steve Jobs"yields a plethora of hits, and I even worked at Apple for a number of years. So with all of that as a preamble, I have no ax to grind with the good people in Cupertino.

But the long-term chart looks really, really, reaaaaaaaaaaaly extended. Look at this gigantic ascending wedge spanning back to when the stock was in the single digits.

0210-aapl1

.....look a little closer........

0210-aapl2

.....and closer still........

0210-aapl3

We are right up against that massive trendline. Does this mean Apple doesn't have a prayer of crossing it? Of course not. The draw of getting AAPL above $500 is huge, so I wouldn't be surprised to see it cross that level and maybe tack on a few dollars for good measure.

But all this talk about Apple going to $1,000 is just plain silly. It's not going to happen, anymore than thepredictions of Qualcomm going to $1,000/share in 1999 materialized (just reading a snippet from the linked article reminds me of how utterly insane things were back then; to wit: "Qualcomm shares gained 156 to close at 659, a new 52-week high. Shares have traded as low as 25.31 in the past year.")

Oh, and as for Barron's efficacy at nailing market turns with its cover stories, it is unparalleled. I leave you with their cover from the market's bottom (to the day, no less) in early March 2009.

 

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Sat, 02/18/2012 - 04:01 | 2172524 FataMorgana
FataMorgana's picture

Tim, didn't you say on your blog that "Apple is the Market" ? That remark alone is astonishing.  If you indeed believe Apple is the market, why are you short all the time in past years

Sat, 02/11/2012 - 23:54 | 2150177 Lucius Corneliu...
Lucius Cornelius Sulla's picture

At the end of the day all that matters for Apple is the next gadget product cycle.  With the competition nipping at their heals a miss is very likely.  Not a very stable business model.

Sat, 02/11/2012 - 22:28 | 2150081 AN0NYM0US
AN0NYM0US's picture

Glad to see the invite - keep the envelope it will be worth something one day.  I used to visit Slope back in the AnnaMall days but I wandered away as the cast of commenters became contributors  and the bear's head became so large my monitor ran out of pixels - I think you were moving from blogging to running a fund, how have the returns been?

Sat, 02/11/2012 - 22:09 | 2150035 HD
HD's picture

The last apple anything I used was an Apple IIe more than 20 years ago. I have nothing against apple - I just don't see what the big deal is. I've built my own systems for 15 years, (which is nowhere near as complicated as people seem to think it is) I like to have control of the hardware and software. Apple goes out of it's way to lock everything down and tries to create and idiot proof closed system. I suspect the cult following Apple has enjoyed will diminish with the passing of Jobs.

Sat, 02/11/2012 - 21:28 | 2149985 Tim Knight from...
Tim Knight from Slope of Hope's picture

@ israhole - go sit on a carrot.

Sat, 02/11/2012 - 20:21 | 2149921 hotkarlandthecl...
hotkarlandtheclevelandsteamers's picture

Reggie, is that you changing names coming in under a different alias $220 higher than your original sell call.

Sat, 02/11/2012 - 19:57 | 2149895 jonjon831983
jonjon831983's picture

Wait, with the "it's not going to happen".  Maybe true, but we shouldn't overlook greed and desperation.  Media and brain washed investors could keep pumping up the stock to the stratosphere.

Sat, 02/11/2012 - 20:08 | 2149905 jonjon831983
jonjon831983's picture

Sorry!!! My boo boo! I should add millionaire janitors who's relatives are jealous and want in on the hot stock tip.

Or was I thinking Facebook, Nortel, JDSU... get confused nowadays with all the stocks getting pumped.

Anyways, similar mechanisms.

Sat, 02/11/2012 - 19:02 | 2149818 HungrySeagull
HungrySeagull's picture

Apple will choke on it's own shares when the worm within turns.

What goes up must come down.

If I bought apple shares early and saw that I doubled or tripled the cash, I would sell and GTFO.

1000 dollars is but a dream...

Spend spend spend your labors
Spend spend spend your payroll
Spend spend spend your children

Life is but a share.

Sat, 02/11/2012 - 18:58 | 2149809 GMadScientist
GMadScientist's picture

K.o.D

Sat, 02/11/2012 - 18:58 | 2149808 israhole
israhole's picture

Who read's Barron's anymore?  Apparently Tim still reads it after admitting it's propaganda.  

Sat, 02/11/2012 - 19:51 | 2149886 Freddie
Freddie's picture

Barrons is shit and they love the Democrat's muslim - Baby Allah from ChiTown.   Alan Abelson sucks so much.  It is a joke newspaper.

As far as Apple - it actually could go to $1,000 a share as the dollar implodes thanks to The Bernank and Baby Allah.  

Sat, 02/11/2012 - 18:54 | 2149805 israhole
israhole's picture

I like Tim Knight.  He's the single best contrary indicator I've ever seen.  

Sat, 02/11/2012 - 22:32 | 2150086 AN0NYM0US
AN0NYM0US's picture

think Gartman

Sat, 02/11/2012 - 18:53 | 2149804 pcrotty41@hotma...
pcrotty41@hotmail.com's picture

Looks to be making a parabolic move right now...usually the parabolic moves I have seen are followed by steep declines, but AAPL has had several such moves before and still rebounded...the long term chart is breathtaking to say the least..

Sat, 02/11/2012 - 18:49 | 2149801 Dermasolarapate...
Dermasolarapaterraphatrima's picture

Lucent Technologies shot up to $80 before it crashed down to $3 a share.

 

Good luck with these.

Sat, 02/11/2012 - 20:46 | 2149942 Dburn
Dburn's picture

Yeah, Carly Fiorina escaped that . Talk about channel stuffing; they would regularly give 2 Billion dollar credit lines to a 10 -person company. Ship them at the end of the quarter and get it back during the quarter. Fiorina was VP of sales who was behinfd it. She got hired by HP as CEO weeks before "accounting irregularities" were found at Lucent.

Then there was Commerce One, which Larry Ellison decribed as a software "feature", not a company with a 200B+ market cap . On the same day Qualcom gained 166 points , I watched Coomerce one go up 200 Points in one day and then settle down in the high 500s. Yahoo , Qualcom and Commerce One were going to 2:1 to 4:1 splits after the new year. I don't know what I was thinking just watching it. Take a few call option on the way and a few puts on the way down?

'

 

Sat, 02/11/2012 - 18:36 | 2149781 Waterfallsparkles
Waterfallsparkles's picture

Plus, the GURU is Dead.  In my opinion this Rally is a Get Out Of Dodge Card before the Company breaks down without Steve Jobs. Anyone that Shorted Aapl because of Steve Jobs Death has gotten their head handed to them.  This is nothing but a Super inflated short squeeze.

To put the cherry on the top the Facebook announcement about their public filing goosed all Nasdq stocks. 

Next qtr earnings will be interesting to say the least.

Sat, 02/11/2012 - 18:27 | 2149775 Scribbles
Scribbles's picture

It WILL hit $1000/share.  But, at that point, a sandwhich will be $1800.

I don't get why none of those other computer companies can't just design a clean looking laptop that isn't preloaded with BS software.  It's so simple.

Sat, 02/11/2012 - 18:26 | 2149772 Waterfallsparkles
Waterfallsparkles's picture

I remember when Goog was king.  It went parabolic and went up every day.  UNTIL an Analysis came out and said it would go to $2,000.  Since then it has become a heavy weight that seems to be stuck in the mud.  Yes, everyone owns it but without Mo Mo it just plots along around the same price.

Aapl will be the same.  No one will want to sell it but the price of entry for the average investor is out of reach.

Plus, with Steve Jobs gone, it will in the end affect the stock and the price.  Maybe a little innovation left in the pipe line but after that it will probably end like Microsoft.

Sat, 02/11/2012 - 18:16 | 2149765 LowProfile
LowProfile's picture

So Tim...

...What I really want to know is if you bought back that gold bar you sold years ago...

Sat, 02/11/2012 - 18:06 | 2149761 iamtheeggman wh...
iamtheeggman whooooooooooooo's picture

What if Apple put their entire cash hoard into gold?

Sat, 02/11/2012 - 19:54 | 2149891 Freddie
Freddie's picture

Democreep Warner Buffett called gold a worthless barabaric relic the other day.  He was kissing the muslim's arse and getting another big payday from the robo signing faux settlement.

Sat, 02/11/2012 - 18:24 | 2149770 Alpha Monkey
Alpha Monkey's picture

I'd be ok with that.

Sat, 02/11/2012 - 20:47 | 2149758 Dadburnitpa
Dadburnitpa's picture

"I'm not one of the crazies that waits in line for four days; I simply show up later in the day, pay for it, and resume with my life."

But of course, you just HAD to have one on the first day.

Fan of AAPL.  Fond of Jobs.   Even worked there!

You are so cool.

<sarc off>

Sat, 02/11/2012 - 18:04 | 2149755 adr
adr's picture

Apple's real growth is over. A good case can be made for a realistic valuation of Apple at $260 a share. Apple is really nothing but a marketing company, although that seems to be all the rage these days. Valuing a brand 1000X the value of anything they actually produce, definition of a bubble. Apple doesn't actually produce anything, just buy a chinese made product, slap a brand logo on it, sell for 500x what they paid. Are the products better? From a technical standpoint, no. You can buy far superior hardware for nearly half the cost of an Apple product. New Asus ultrabooks for $1000 surpass the Macbook pro in almost every way.

A $1 trillion market cap? Really? Exxon could maybe make a case for that, considering the massive amount of land, equipment, resources, and jobs they control. Apple; wow patents they never should have been granted, chinese products, a corporate headquarters with a few thousand employees. That will be worth more than twice a company that drills for the most valuable substance all over the world and directly affects almost every human being on the planet???

Apple TV? Can that really add a couple hundred billion in revenue to justify $1000 a share? Maybe in hype factor, never in sales. Apple would need to knock off and steal all of Samsung, Sony, LG, Sharp, and Toshiba's sales just to do so. Although estimating the stupidity of Americans is never actually possible. Will they overspend on something they don't need, just to not be left out of the cool click? The iPad proves that. Millions bought one just to be seen with it.

You can buy the best rated TV of 2011, a 55" 3D LED model, for $1499. The exact price of the rumored 42" LG sourced Apple TV. Will a person looking for a TV sacrifice 13" and better picture quality for an Apple logo, just for bragging rights? If the only thing they care about is social standing, yes they probably will.

Since Apple doesn't pay a dividend, and never will, they only purpose for buying a share of stock is the belief it will increase in value forever. An insane concept that always leads to pain. Growth can not go on forever. The market for Apple is already oversaturated. Anyone who wants an Apple product has already bought one. Eventually you run out of customers. Apple must convince millions of customers to buy the new version every time to keep "growth" constant. Either that or steal growth from competitors on your way to a monopoly, a notion Steve Jobs orgasmed over every day of his professional life.

Could Apple get to $1000 a share, probably. Should Apple ever be $1000 a share, never. It will make a lot of the Wall Street set very happy and increase the net worth of a few people by a large margin. But in terms of the real world, it will just raise us up another rung on the ladder to oblivion.  

Sun, 02/12/2012 - 08:21 | 2150556 max2205
max2205's picture

Please compare appl chart to MSFT in 1998 2001. Might tell you something about mania

Sat, 02/11/2012 - 17:55 | 2149747 salient
salient's picture

Indeed.  The wonder of it all is the number of toys and contraptions still in the room.  

Sat, 02/11/2012 - 17:24 | 2149716 salient
salient's picture

$1000 prognostication largely irrelevant.  So much depends upon what the other animals in the room are doing.  As far as I'm concerned, the room is dark (the generator is out of fuel) and the floor is littered with paper.  

Sat, 02/11/2012 - 17:43 | 2149740 wee-weed up
wee-weed up's picture

Every inch of the floor of the room is covered in set mousetraps. A pinpong ball labeled Greece is tossed into the room. The pingpong ball is still in mid-air but getting closer and closer to the floor. Such is the present state of the global economy.

Sat, 02/11/2012 - 17:22 | 2149714 razorthin
razorthin's picture

LOL! You can usually divide by 10 what ever price a pumping assclown pounds the table on a high-flying stock during a market mania, once the bust sets in.

TIMBER!

Sat, 02/11/2012 - 17:10 | 2149705 Sudden Debt
Sudden Debt's picture

Lets see if apple can stay above 500$ for much longuer.
Samsung and Sony are really catching up with their pads over here in europe and it's now the cool thing to have the android instead of the mainstream ipad.
And HTC is the big competition in cheap smartphones who also happen to be as good as the iphones.
The free android stores are the biggest surplus and will give apple a serious beating.
Why 6 to 12 months? End of lifecylce of the ipad2 and iphone4

Sat, 02/11/2012 - 17:00 | 2149693 A Lunatic
A Lunatic's picture

Apple Pi in the sky

Sat, 02/11/2012 - 16:59 | 2149692 I am a Man I am...
I am a Man I am Forty's picture

if Apple gets to 1,000 it won't have anything to do with those charts and will have everything to do with earnings growth.  An easy case can be made that Apple should be trading at 650.  Apple will get to 1000 due to corporate and asian growth and a good apple TV.

Sat, 02/11/2012 - 19:59 | 2149899 ebworthen
ebworthen's picture

I'm old enough to remember when Apple crashed and was near bankruptcy in the mid 90's.

Why?  Steve Jobs wasn't there.

Steve Jobs came back in '96 and saved Apple.

Steve Jobs is regrettably gone.

There is a very good chance that without him the 500% climb in the past 3 years is a bubble.

If you stay in Apple you are gambling that they can be Apple without Steve Jobs.

If I had made 500% I would cash out.

 

Sat, 02/11/2012 - 23:10 | 2150132 Freddie
Freddie's picture

Maybe Wozniak can come back.

Sun, 02/12/2012 - 01:24 | 2150323 ebworthen
ebworthen's picture

From what I have seen he is RETIRED and loving it.

You never know, but I don't see it, and Jobs was the real driver IMHO.

Never say never I suppose.

Sat, 02/11/2012 - 16:56 | 2149683 Rastadamus
Rastadamus's picture

Can't wait to see it crash hard......

Sat, 02/11/2012 - 16:55 | 2149679 falak pema
falak pema's picture

you will give RM boils all over his body...charts and trends are as good as smoke plumes on a pow pow summit. 

What is the rationale of +15000 when nothing has been resolved since 2008, on the contrary. Last time we fell from 14500 to 6000. Looks like we love climbing that see-saw one more time.

Sat, 02/11/2012 - 20:09 | 2149906 caerus
caerus's picture

wonderful headlines for hibernating bears

Sat, 02/11/2012 - 16:57 | 2149688 Hulk
Hulk's picture

DOW 36,000 Bitchez !!!  Yet, where are all the customer's yachts ???

Sat, 02/11/2012 - 19:16 | 2149852 Manthong
Manthong's picture

Good thing there isn't any of that "irrational exhuberance" floating around out there.

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