Apple’s Stock Price Has Always Been Irrational

From a year-old piece by Abdel Ibrahim at The TechBlock:

The stock market sell-off of 2007-2009 bears out this cautionary approach. During that period, Apple released its original iPhone, followed by the iPhone 3G, the iPod touch, the MacBook Air, and a variety of updates to their Mac line. They were seeing record earnings quarter after quarter, not missing a single beat, yet the stock dropped from roughly $202 to $78 in that period. Why? Because stocks react to people, not analysts.

In hindsight, everyone should be able to agree that this was crazy.

Via email, here’s the take from DF reader Gregory Ley:

As Apple grew like crazy the past 10 years it never traded like a “growth stock”. Always had low valuations (infamously low P/E ratios relative to peers, especially Amazon). Now that growth is somewhat slowing (profit-wise, at least… not revenue or units — those are still growing +20% year over year) the stock is “falling back to earth” except it was never overvalued to begin with. That’s the best explanation I can come up with. AAPL, the stock, has almost become disassociated with Apple, the company. The same craziness that seems to overvalue Amazon also undervalues Apple.

Thursday, 24 January 2013