First the good news. AAPL will make scads of money no matter what.
Now the bad news. The company, built on innovation and disruptive technology under Steve Jobs, has become a me-too company while slowly slipping on the tech fronts it once totally dominated.
When once the company revolutionized the computer market with high-end desktop computing and tablet computing, and completely transformed the music industry with the iPod and ITunes, and the personal phone world with the IPhone (it’s been calculated that people now spend and average of 46 minutes a day just checking their smartphones), the company appears now to have no more worlds to conquer, or at least worlds IT can conquer.
The “Me-Toos” include the iPhone sometimes chasing Samsung Android instead of the other way around, an Apple watch that makes so sense at all against the wristwatches of older generations and smartphones of the younger generation (what, are millennials too lazy to check the phone time and email? hardly); a TV service that is sort of Netflix-Amazon and sort of Roku-Google-Chrome and as such Apple is entering one of the most competitive business arenas in which they are already far behind; and now there is talk Apple might build an electric car to complete with Tesla (huh?) to say nothing of Toyota, GM, Mercedes, BMW and the rest of the auto world.
More bad news. Check out this link from The Street: 7 Incredible Apple Patents Than May Hint At The Next Big Thing. That headline may sound like good news but not so. Despite the hyperbole the “7 Incredibles” include a personal remote control, a virtual reality headset (to compete with Oculus — more “me too”), an “IPen” (it writes), a flexible phone (thought they already manufactured that…by accident), and a couple other noodles.
This is obviously not Steve Jobs’ Apple anymore.
So what about the stock?
First off, AAPL stock has generated an unprecedented market cap of more than $700 billion when the previous record was just over $600 billion (MSFT), and only four other companies in history have exceeded $500 billion market caps (CSCO, GE, INTC, XOM) and Apple spent more than $100 billion of the company’s massive cash trove to get there. They likely will have spend more to stay so high (which, granted, they certainly can do since they have more than $200 billion in reserve and the means to make more).
But more importantly, time and history is not on the stock’s side (all of those companies that flew over a $500 billion market cap with the exception of XOM have had their stock cut in half or more eventually, and XOM has lost more than 20 percent). That time too will come eventually to AAPL’s stock also — when a company’s stock is priced to perfection and over-owned by everyone the “next big thing” is an inevitable tumble.
So let’s consider the chart of AAPL below. The good news — it is at the bottom and a long-time range and it can move back up within that range (MSFT went sideways for 12 years after its fall), and AAPL with all of its cash might hold high ground going sideways. The bad news, the stock drops below 119-120 and all hell breaks loose when everyone who bought it basically this year realizes they are losing money.
The time for the tumble could be right now.
That’s it, one way or the other.
(Click on the chart for a larger image)