Research financial analysts at Piper Jaffray issued a report this week predicting that shares of Apple will hit the $1,000 milestone in the next year or two. If that holds true, the computer company would be in unchartered waters, nearing a trillion-dollar valuation. Skeptical of the “T” word, I wanted to know what other analysts had to say about the report, namely, MSNBC Mad Money host and known crazy-man Jim Cramer.
Cramer acknowledged Apple’s dominance in the smartphone, tablet and computer industry, but questioned whether or not investors were willing to pay $1,000 a share.
Cramer said that Apple, of course, deserves a multiple far greater than that of the competition. But shares have historically always been valued as the underdog, he noted, so Piper Jaffary just extended that trend into its analysis. And that’s why, he said, thinking of Apple as a $1,000 stock is not “irrationally exuberant” as some have claimed, but likely a foregone conclusion.
The market was certainly listening after the analysts released their report, as Apple rose to an intraday record, climbing 1.7 percent to $628.88 before noon Tuesday, Bloomberg reported.
But $1 trillion? That’s absurd. If it happened, Apple would become the first company ever to generate $1 trillion revenue. Is it really possible? Last fiscal year, the company had sales of $108.2 billion. Apple’s stock began its 53 percent spike this year as rumors started about the third-generation iPad and its retina display. Now consumers are looking toward the sixth-generation iPhone, which is reportedly coming this summer. It’s going to take more than a fancy-screened iPad and slick new iPhone to charge toward $1 trillion, however. Apple TV anyone? (And I’m not talking about that little black box I currently have plugged into my flatscreen.)
Journalists at Forbes said one thing to keep an eye on is the “growing nature of Apple as a proxy to beat the broader market.” Apple is nearing 5 percent weighting in the S&P 500. Historically, that is a sign of when a company will start to recess a bit on the stock charts. Behind Apple is Exxon Mobil at 3.2 percent and Microsoft and IBM at 1.9 percent.
After the market opened Wednesday morning, Apple dipped about .94 percent to $623.40. Will the wild ride continue for Tim Cook and the computer gang from Cupertino? Will we see $1,000 a share? Will the rich get richer? Probably. And after writing up this report, I can’t help but think of Dr. Evil.