6 ms·

> The stock market hasn't been representative of real world for a long time now. Read as: [their revenues] haven’t been representative of real world for a lon

• harpratap 6y ago
  So why is Samsung, who makes similar kind of revenue not up there with $1T market valuation? Walmart makes double that revenue.
  • jeffshek 6y ago
    Because their "expected" future profit margins are significantly lower than Apple's. Caveat: "Expected" does not mean fact. But it is understandable why investors believe this.
    • harpratap 6y ago
      > Caveat: "Expected" does not mean fact. But it is understandable why investors believe this. Yes, this is what I said. Stock markets factor in future potential (a little too much I think) and not just current performance. Hence their growing diversion from reality.
      • valuearb 6y ago
        Except that Apples current performance demolishes Samsung, Apple is and has been far more profitable. Apple has never been highly valued either, it spent most of the last decade well below the markets average price to earnings ratio, the market was continually saying it didn’t think Apples earnings could grow, or even last. It hasn’t been till the last year where Apple finally broke the market average and squeezed into a low 20 PE ratio. Fir comparison, Amazon hasn’t been below 60 in forever.
        • harpratap 6y ago
          I don't see how? Samsung made $45B profit in 2017 vs $48B in 2017 for Apple. 2018- $49B Samsung vs $60B Apple. Even in worst cases Apple made 2x the profits as Samsung. Which means they should at least be worth half as much as Apple by your logic? But they are 5 times less than Apple right now in market cap.
          • asplake 6y ago
            Apple is seen as the one to sustain those profits. The models for Samsung either see lower profits or discount them more steeply in their risk adjustments.
          • valuearb 6y ago
            Samsung has much lower quality profits. They have lower margins, and have much higher capital reinvestment requirements please, ie are forced to reinvest more of their profit back into their manufacturing plants. Essentially their profits are overstated.
            • fauigerzigerk 6y ago
              Samsung's net income would only be overstated if their capital spending was unsustainably low. I don't know if that is actually the case.
              • valuearb 6y ago
                Or if they were run by a felon in a country where accounting and governmental employees are highly motivated not to criticize said felons accounting practices. Then you might think twice about taking them at face value.
  • outside1234 6y ago
    Stocks are valued by their earnings largely. A stock’s price is theoretically the current value of a long term stream of income adjusted by the risk factor around its growth (positive or negative). Revenue is interesting but only to the extent that it indicates earnings. This is because any two people can create two companies with a billion dollars in revenue but it is much more difficult to build one with a billion in earnings.
  • dmode 6y ago
    Valuation has only a fleeting relationship with revenue. In the traditional sense valuation is essentially the cash returned to shareholders discounted over time. Walmart’s margins are thin. That’s why their valuation is much lower
• dungdongdang 6y ago
  Valuation is fine, but as mentioned, that is short-term success. Enron was good at that. Myspace was good at that. RIM/blackberry and the nokia phones had that. And almost overnight, it's gone. Apple is a fad that got propped up by phones. They're behind all other major computer vendors. They have a very small marketshare for phones. They have the biggest profit margin out of anyone, and it's because of literally a couple of products. People who go for things with a huge profit margin (overpriced things) do so based on emotional response (a fad) as opposed to logical reasoning. This is why they buy a phone wrapped in glass - it's shiny. That makes them liking your product volatile. A company enjoying 15 minutes of fame on limited SKUs is not a successful company. It's a rich company, that won the lottery from people who like shiny things. Yes, they do make things that "just work" better than the competition. They limit choice, put you behind a wall, give you no control - and there is that group of people who want that. The problem is, that group will overnight change to some new fad phone vendor that comes out, and apple will become uncool overnight. Same thing will happen to facebook, instagram, twitter, etc. If you do take microsoft or google for example - they have a thousand eggs in a hundred baskets. This is stability. Heck, even amazon - cloud services and selling goods, book store, mechanical turk - they're in everything. Apple is selling a phone and a computer.
  • culturestate 6y ago
    > Apple is selling a phone and a computer. Even if this were true I don't think it would matter because Apple sells a lot of phones, but anyway this is a gross oversimplification of what Apple is in 2020. The services business alone - App Store, iTunes, etc. - is almost $50 billion a year. Apple nets as much money selling digital goods as Samsung does from its entire line of business. They also make the only smartwatch consumers care about, headphones that have become status symbols, the canonical tablet (everything is an iPad even if it isn't), one of the most popular STBs in the world, and a metric ton of accessories and peripherals. The money doesn't come from accounting fraud or tricking people; it comes from making really good stuff that lots of people want to buy.
    • harpratap 6y ago
      > Apple nets as much money selling digital goods as Samsung does from its entire line of business. Can I see source for this claim? Both Samsung Electronics and Apple do $200B+ revenue every year.