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Apple is now worth more than the entire Russell 2000
- mensetmanusman 3y agoI’m curious how analysts price in the small % chance that China snaps their finger and destroys Apple’s manufacturing supply chain.
- senttoschool 3y agoI'm going to guess that most major public international companies can be destroyed if China decides to do so. The US did try with Huawei.
- jjtheblunt 3y agoThat supply chain exists in China though to make China huge money, so why would they?
- mensetmanusman 3y agoChina just destroyed hundreds of thousands of tech jobs due to ideology. Ideology trumps reason for true believers like Xi. They are struggling now with massive youth unemployment, but the CCP believes the struggle is worth it.
- mmsnberbar66 3y agowhich ideology is that?
- CorrectHorseBat 3y agoXi Jinping Thought https://en.m.wikipedia.org/wiki/Xi_Jinping_Thought https://en.m.wikipedia.org/wiki/Xi_Jinping_Thought
- NhanH 3y ago> China just destroyed hundreds of thousands of tech jobs due to ideology What did they do?
- jpgvm 3y agoProbably referring to the tech "crackdown" that was undertaken from about 2021 through to now. Though "crackdown" really is overly strongly worded. Really what they did was catch China's anti-trust and data protection laws up to approximately EU levels. This of course caused investors to panic like crazy because "uncertainty" even though everything was incredibly certain. The one people should have been worried about was the complete obliteration of the after-school industry. This was telegraphed for a whole year before it happened and investors sat on their hands the whole time and then got wiped out. Only -then- did they decide that "woe is me, I didn't pay any attention to all to changing legal landscape of what CCP considers to be entirely their domain". TLDR: Investors are uninformed, dumb and a poor judge of future success in most cases.
- naravara 3y agoHundreds of thousands in the Chinese context doesn't seem like very much? Presumably they can all get other jobs no?
- mensetmanusman 3y agohttps://www.bloomberg.com/news/articles/2023-05-16/china-s-youth-jobless-rate-jumps-to-record-20-4-in-danger-sign?leadSource=uverify%20wall#xj4y7vzkg https://www.bloomberg.com/news/articles/2023-05-16/china-s-y... >20% youth unemployment, and they stop counting you after a few months of no success finding a job. Not everyone is finding jobs.
- naravara 3y agoOoof that sounds bad.
- nocsi 3y agoIt’s Chinas way of humbling their tech workers and giving them a reminder. Bored youth isn’t a big deal - they’re all going to be plenty busy if Xi comes through on his 2027 plans
- mschuster91 3y agoWhich is why Apple is slowly moving manufacture capacity to Thailand and Vietnam. The writing has been on the wall for long enough time now that China is no longer a reliable partner (if it has ever been that). The most pressing issue anyway isn't that China kicks Apple and other Western companies out of the country - it's the utter dominance of TSMC. Everyone is going to be really, really screwed should China invade Taiwan and TSMC management blows up the factories to prevent them from falling into Chinese hands.
- jpgvm 3y agoChina has been an incredibly reliable partner to Apple. They were looking to expand that relationship before the US government shut it down. They wouldn't have been planning that if it was going poorly. Companies are relocating out of China for cost and for political risk of further US decoupling. China itself (apart from rising costs) isn't really the entity causing this despite what the narrative may sound from US media. I'm located in Thailand and my friends are running companies that are on the beneficial end of this migration. It's actually been tough going because atleast for manufacturing the infrastructure isn't really here outside of the auto industry (which is dominated by local factories of Japanese brands). We will see though, I anticipate that much of this will blow over in time, a new status quo will be reached with China that might see their share of exports to the US decline somewhat but total decoupling is unlikely as it would split the world in half.
- Longlius 3y ago> China itself (apart from rising costs) isn't really the entity causing this despite what the narrative may sound from US media. China has been literally abducting foreign workers and you think the fact that companies want to leave the country falls squarely on the shoulders of the US government?
- AbrahamParangi 3y agoIf China invades Taiwan, I’m looking forward to the commentary about how it is America’s fault.
- jpgvm 3y agoApproximately none. APPL demands some of the highest P/E and PEG premiums in the entire stock market, definitely higher than anything in it's weight class. I also think that happens to be a pretty reasonable assessment. China is not at all interested in Apple pulling out of manufacturing in China. They are a great customer and have provided many Chinese companies with the opportunity to grow massively. YTMC for instance was slated to become a primary memory supplier for Apple before the US government blocked it. So it seems pretty obvious the risk isn't China, it's the US government deciding that Apple is no longer allowed to manufacture or perhaps even sell high end Macs to China etc.
- beebeepka 3y agohttps://www.businessinsider.com/us-would-destroy-taiwan-semiconductor-factories-avoid-china-trump-adviser-2023-3 https://www.businessinsider.com/us-would-destroy-taiwan-semi... https://www.theregister.com/2022/01/05/taiwan_should_destory_tsmc_paper/ https://www.theregister.com/2022/01/05/taiwan_should_destory... https://www.tomshardware.com/news/taiwan-will-defend-tsmc-from-us-bombing-in-the-event-of-a-china-war https://www.tomshardware.com/news/taiwan-will-defend-tsmc-fr... https://www.reuters.com/technology/asml-ceo-says-politics-will-lead-slower-semiconductor-advances-2023-04-26/ https://www.reuters.com/technology/asml-ceo-says-politics-wi... Dang Chinese won't leave the poor west alone. Can't they just accept US hegemony
- Nevermark 3y agoUnder apparent US hegemony, the US was wasting trillions on wars, while China’s economy grew at a much faster pace. Their increased local suppression, political and military flexing may be helpful to those consolidating power at the top, but they are costly moves to maintain, and have upended the compounding economic power game they were quietly winning. > “The greatest victory is that which requires no battle.” [0] [0] Sun Tzu (Some Chinese guy), The Art of War
- samwillis 3y agoChinas economic growth is built on trade and manufacturing, fucking over the poser child for Chinese manufacturing won't help that. The chance of that happing is close to nill. But it's also worth noting that apple is expanding is manufacturing in other countries, notably India, Vietnam and Brazil, so they are somewhat hedged on that already.
- modernpink 3y agoThe reality is that the quality of production in those countries isn't going to match China, that is why things are still Made in China despite rising wages and geopolitical tensions. The FT reported that 50% of Indian iPhone _casings_ did not pass quality checks [1] to be sent forward for factory use. That is just the casing, a not particularly complex piece relative to other iPhone parts. On top of that, Mac Pro production moved from the US back to China [2] after an attempt at "Made in America" due to easier parts sourcing. I can see Vietnam getting there, but again the scale is just not comparable to China. [1] https://www.ft.com/content/0d70a823-0fba-49ae-a453-2518afcb01f9 https://www.ft.com/content/0d70a823-0fba-49ae-a453-2518afcb0... [2] https://www.ft.com/content/0cddd49e-99d2-11e9-9573-ee5cbb98ed36 https://www.ft.com/content/0cddd49e-99d2-11e9-9573-ee5cbb98e...
- SnorkelTan 3y agoChina used to be known for cheap low-quality products. Building manufacturing capabilities from scratch seems like it would be incredibly difficult and take time. I'm sure those countries will get there. It just really depends on the patron being patient. I would think Apple is.
- Timber-6539 3y ago> The chance of that happing is close to nill. Not nil as long as Taiwan is still "independent".
- NickC25 3y agoI doubt it's priced in at all - as long as Tim ~tows~ toes (thanks HN!) The Party's line with great enthusiasm, it won't happen unless Apple publicly makes the first move. Tim sits on Tsinghua's B-School board, after all. The Party loves Tim, and Tim loves The Party. Obviously, it would be great to see (disclaimer: I use Apple products, own Apple stock & leap call options - so such a scenario would harm me fiscally) because it would signal that the west is tired of China's bullshit and is willing to pay the price to not have to deal with them anymore. That would be a huge statement.
- gnu8 3y agoToe
- idontwantthis 3y agokoetoe?
- ChoGGi 3y agoToe the starting line
- aaronbrethorst 3y agoKowtow, but no.
- nytesky 3y agoI always thought it was tow, like a tugboat towing something and keeping it aligned. Instead it’s about foot races! “ The phrase means “follow the rules or obey an authority.” “Tow the line” is a misspelling based on “toe” and “tow” sounding the same, but “tow the line” is always an error. The phrase comes from the idea of standing at the starting line before a race (i.e., getting as close as possible without overstepping the mark).”
- Workaccount2 3y agoInteresting, but I'm going to stick with "tow the line" because it simply makes way more sense and is way more intuitive.
- seanhunter 3y agoThey obsess about it. For example: https://seekingalpha.com/article/4558283-apple-how-the-risk-of-china-affects-my-investment-thesis https://seekingalpha.com/article/4558283-apple-how-the-risk-... or an older story but shows how this dynamic works https://www.cnbc.com/2019/05/22/goldman-apples-earnings-would-drop-by-nearly-30percent-if-china-bans-its-products.html https://www.cnbc.com/2019/05/22/goldman-apples-earnings-woul... for people who trade apple, stories about China, supply chain and government policy will be all over their bloombergs every day.
- tootie 3y agoThe power of terrific marketing, vertical integration and a dash of monopolism
- rwaksmunski 3y agoMonopoly in what? Profits?
- nordsieck 3y ago> Monopoly in what? Profits? I assume they're talking about the app store? It's the only thing that sort of makes sense. I suppose the other candidate is the "Made For iPhone" program.
- Freebytes 3y agoAny company could come along and make a better product, but there is a huge barrier to entry in terms of the operating system side. Because of its ubiquitous nature, Android based systems have a bad reputation to many people. However, one of the greatest barriers to entry are the software patents (which in my mind should not exist).
- robertlagrant 3y agoAnd the only things that really matter: great products and operations.
- elforce002 3y agoBy numbers only, google android will be more of a monopoly than apple since 100% of phone manufacturers use android.
- smoldesu 3y agoThis recent Linux monopoly on the server side concerns me...
- johntiger1 3y agoApple stock price could fluctuate 1% and the news would report $27B in market cap created/destroyed...
- gedy 3y agoI like Apple, but "Worth" is a relative term. Definitely feels overvalued* as a layman. * Could drop drastically and easily
- newsclues 3y agoAnd yet it is a public company where the market decides the value and worth.
- postalrat 3y agoJust like bitcoin or any cryptocurrency.
- kaba0 3y agoWell stock value is like that. Apple’s “real” worth though is definitely more close to its stock prices than, say tesla’s which had at point more value per share than all the other auto factories combined or something like that? Apple is definitely not a bubble comparatively, it has both the track history, the factories, human capacity for all their products.
- MuffinFlavored 3y ago> Definitely feels overvalued* as a layman. https://finviz.com/quote.ashx?t=AAPL&p=d https://finviz.com/quote.ashx?t=AAPL&p=d 29x P/E, 26x P/E and they're soon rumored to break into an entirely new segment for them https://www.tomsguide.com/news/apple-vr-and-mixed-reality-headset-release-date-price-specs-and-leaks https://www.tomsguide.com/news/apple-vr-and-mixed-reality-he... https://www.macrumors.com/roundup/ar-vr/ https://www.macrumors.com/roundup/ar-vr/ I'm not Apple fanboy but https://www.macrotrends.net/stocks/charts/AAPL/apple/eps-earnings-per-share-diluted https://www.macrotrends.net/stocks/charts/AAPL/apple/eps-ear... I feel like "feels" and "opinion on complex investment instrument valuation" shouldn't really be used all that often
- travisgriggs 3y agoRussell 2000 Index https://en.m.wikipedia.org/wiki/Russell_2000_Index https://en.m.wikipedia.org/wiki/Russell_2000_Index
- htag 3y agoMy summary from reading a bit (correct me if I'm wrong) If you were to order all publicly traded companies incorporated in the US, The Russell 2000 would include the companies ranked 1000-3000.
- seanhunter 3y agoYes. Order them by market capitalization specifically. The important thing to know about the Russell indexes is that a lot of broad passive equity investors (think big index funds, massive pensions etc) basically just buy and hold the Russell indexes in massive quantity. The russell 2000 would be the weapon of choice for the "small cap" allocation for these investors.
- alexb_ 3y agoApple is the most valuable fashion brand by a mile.
- secondcoming 3y agoThe Apple eco-system is essentially a mini-country
- nocsi 3y agoAt least so far Apple has been so far more ethical than other fruit companies. No wars or banana republics as of yet
- smoldesu 3y agoEthics being a... relative thing: https://support.apple.com/en-us/HT208351 https://support.apple.com/en-us/HT208351 "By “free speech”, I simply mean that which matches the law." - Elon "Hellsite Owner" Musk
- balderdash 3y agoPerhaps a good reason to consider non-market cap weighted indices
- phkahler 3y agoThe surprising this to me is their P/E is only 29. Kind of on the high side, but not crazy like tech stocks in the old days. Why on the high side? Because P/E is what we use to evaluate stocks for long term investment giving returns (dividends) without trading the shares. With a P/E of 29 their profits could be distributed to shareholders for about a 3 percent annual return - not very good in a world of 5 percent and higher interest rates, but also not absolute crap either. In other words as shocking as the valuation is, its actually not insane.
- adam_arthur 3y ago3% yield with moderate growth/fair amount of legal risk looks quite bad to me. The 10y treasury pays more than 3% risk free, and you can buy a close to risk free (and tax free) Muni bond paying 5% Despite Apple’s entrenched position, their large size limits how quickly they can grow, and they’re almost certain to face antitrust/legal action from congress if they grow materially further from here. Effectively capping how large they can get. There are tons and tons of fire-saled stocks out there yielding far higher with still limited risk. Many REITs in particular have mid to high single digit yield with arguably less risk and similar growth profile. The S&P500 in general is overbid/overvalued nowadays due to passive flows. Some crazy valuation disparities between like kind businesses that are in/out. To your point, 30 PE looks low relative to broader tech valuations in the 2010s. But this is not the ZIRP era of the 2010s
- adwi 3y agoWhat are some of the stocks you view as fire sales?
- phkahler 3y agoYou might like a P/E of 7.14 for XOM - ExxonMobil, but you'd also be betting against EVs taking over the world in the near term (not a bad bet IMHO). The yield is only 3.5 percent, but they have a history of not reducing the dividend so it's conservative. I'd call it a fire sale but the stock price itself hasn't done much overall in 15 years either. You can't fight public perception ;-)
- Alifatisk 3y agoThey are almost hitting 3 trillion dollars, I can barely wrap my head around that number. It's easy to say it but just to imagine the amount is just mind boggling.
- nikolay 3y agoThis is absolutely crazy and it's a clear indication that the stock market is a fantasy stock market!