Could Apple shares ever hit $600?
Apple’s meteoric ascent to $200 per share just this month have left many bewildered as to how the company that was, less than a decade ago, in shambles, has risen to the levels of success it currently enjoys. Naysayers have consistently denied that Apple could reach each progressive plateau of success; however, is there really any chance that Apple could ever reach, say, $600 per share?
You might wonder why I choose $600 as a level of god-like success; truthfully, I didn’t come up with the number. A one Stephen Coleman, CIO of Daedalus Capital LLC, who happens to be the happy owner of $7 million in Apple shares, claims that Apple shares will reach that $600 per share benchmark within 18 months, according to the NY Times.
Obviously Coleman knows a thing or two about investing and forecasting, per his position, but is $600 per share feasible?Completely. It won’t be easy, though. 18 months isn’t that long, and tripling share values is no small order.
However, here’s how, if at all, Apple could do it:
- maintain and build the Apple brand image. Apple needs to quickly work out whatever kinks are lurking in Leopard, continue its successful marketing campaign, and generally make every Apple product the desire of every consumer’s heart.
- improve iPhone technology and circulation. Apple needs to release the second wave of iPhones sometime soon, with new functionality; if at all possible, they need to release it to more providers than just AT&T in the U.S. Most consumers that haven’t adopted the iPhone have not done so because they aren’t willing to switch networks; however, those same consumers would quickly purchase iPhones if they were available with the consumers’ cellular providers.
- improve Mac popularity. Though many people have adopted Macs, there is still a lot of work to be done. Sell sell sell!
I think its completely possible that Apple could reach $600 a share…maybe not in 18 months, but somewhere near there. Each facet of Apple’s success (iPods, iPhones, Macs) rely on each other for their own individual success; if Apple can continue to bolster support for those products, $600 is a completely realistic number.
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December 30th, 2007
Wow! Triston, you are a tool. Apple is a successful company, and they make nice products, but their share prices will unlikely expand to $600 per share. Such a meteoric rise demands that they have an incredible expansion of revenue and increase their profit. Put simply, it cannot happen on the hype factor alone (which is largely responsible for their current $200 price). While they are doing well in the profit arena, I am starting to get the feeling that the market has become saturated with Apple products.
Let’s consider each of their market positions:
1.) The iPhone. While an absolutely killer product which has sold well out of the gate, much of the market interested in purchasing one now has one. It’s not the $400 price tag that gets you, but the $2000 yearly phone bill (and AT&T as a provider). This is simply too expensive for even a majority of consumers. My guess is that your reason for a lack of iPhone is similar to my reason: cost. I am student, when I can add an iPhone to my existing family plan for $15 monthly, I will get one. Not till then.
2.) The iPod. If the iPhone is approaching saturation, then the iPod has already reached it. While it can still expand over seas, most in this country who are going to to own them already have iPods. Apple makes a great deal replacing them as their overall quality sucks, but it is primarily a maintenance market, not an expanding one.
3.) The Mac. I have a Mac, I think it is a good computer, but the Mac has never gained much market share. Sure it is expanding, but it still has a lower number of users than Windows Vista (which was released one year ago)! People might be dissatisfied with Microsoft, but they are not dissatisfied enough to dump Redmond in the numbers needed to increase Apple market share. Add to this one other fact: The Mac is still a relatively limited computer environment. Sure, I can run Windows on my Mac is I really want to, but that solution is a complicated workaround. Will the Mac as a platform experience a huge jump in market share? No.
4.) Digital content and the living room. Apple has produced one dismal failure following another in this arena over the course of the last year. They are losing their stranglehold on the market (which I think is a great thing). Apple TV was a disaster. iTunes has suffered major defections and is quickly becoming second rate to Amazon. They have already lost one TV studio and have had to reduce prices.
Further, to have their current hardware strategy succeed, this is where they need to be expanding. That is simply not happening.
Rather than $600 stock price, I expect that Apple will watch their share price fall as their competitors slowly take bites out of their current business model. You just are beginning to see it in the press, but Apple fatigue is starting to set in.
December 30th, 2007
Wow! Triston, you are a tool. Apple is a successful company, and they make nice products, but their share prices will unlikely expand to $600 per share. Such a meteoric rise demands that they have an incredible expansion of revenue and increase their profit. Put simply, it cannot happen on the hype factor alone (which is largely responsible for their current $200 price). While they are doing well in the profit arena, I am starting to get the feeling that the market has become saturated with Apple products.
Let’s consider each of their market positions:
1.) The iPhone. While an absolutely killer product that has sold well out of the gate, much of the market interested in purchasing one now has one. It’s not the $400 price tag that gets you, but the $2000 yearly phone bill (and AT&T as a provider). It is simply too expensive to break into the land of mass consumption (as the iPod was able to do). My guess is that your reason for a lack of iPhone is similar to my reason: cost. I am student, when I can add an iPhone to my existing family plan for $15 monthly, I will get one. Not till then.
2.) The iPod. If the iPhone is approaching saturation, then the iPod has already reached it. While it can still expand over seas, most in this country who are going to to own one has one. Apple makes a great deal of money replacing old units as their overall durability sucks, but it is primarily a maintenance market, not an expanding one.
3.) The Mac. I have a Mac, I think it is a good computer, but the Mac has never gained much market share. Sure it is expanding, but it still has a lower number of users than Windows Vista (which was released one year ago)! People might be dissatisfied with Microsoft, but they are not dissatisfied enough to dump Redmond in the numbers needed to increase Apple market share. Add to this one other fact: The Mac is still a relatively limited computer environment. Sure, I can run Windows on my Mac is I really want to, but that solution is a complicated workaround. Will the Mac as a platform experience a huge jump in market share? No.
4.) Digital content and the living room. Apple has produced one dismal failure following another in this arena over the course of the last year. They are losing their stranglehold on the digital content market (which I think is a great thing). Apple TV was a disaster. iTunes has suffered major defections and is quickly becoming second rate to Amazon. They have already lost one TV studio and have had to reduce prices. Spin this how you want, but if iTunes comes apart at the seams, watch the iPod become largely irrelevant.
Further, to have their current hardware strategy succeed, this is where they need to be expanding. That is simply not happening.
Rather than $600 stock price, I expect that Apple will watch their share price fall as their competitors slowly take bites out of their current business model. You just are beginning to see it in the press, but Apple fatigue is starting to set in.
December 30th, 2007
I don’t think you’re a tool. However, most companies will split well before the $600 mark.
A stock split is usually done by companies that have seen their share price increase to levels that are either too high or are beyond the price levels of similar companies in their sector. The primary motive is to make shares seem more affordable to small investors even though the underlying value of the company has not changed.
A stock split can also result in a stock price increase following the decrease immediately after the split. Since many small investors think the stock is now more affordable and buy the stock, they end up boosting demand and drive up prices. Another reason for the price increase is that a stock split provides a signal to the market that the company’s share price has been increasing and people assume this growth will continue in the future, and again, lift demand and prices.