Editor’s note: This article was first published in October 2013; Apple’s quarterly revenue and net profit, the after-hours share drop, the expected deal with China Mobile and the 700-dollar target are from that time. Share prices are pre-split, as Apple split its stock 7-for-1 in 2014 and 4-for-1 in 2020. This October 2013 opinion (before Apple’s 2014 and 2020 stock splits) is kept as a historical record. It is not investment advice.
Apple has presented results that were greeted with a 3% drop in after-hours trading, although right now the stock has recovered and is down only 0.51%. After the presentation, the doubts have surfaced again.
Apple took in 37.5 billion dollars in revenue (not bad at all) and made a net profit of 7.5 billion dollars in the last quarter. That quarterly profit is 8% lower than the previous quarter’s, but I don’t think Apple is in much trouble for now, even though the market is becoming more and more demanding when it comes to this company.
Apple is expected to reach a deal with China Mobile, the largest mobile phone operator in the world, before the end of 2013.
Apple has also received several pieces of unsolicited advice in the last few days.
Adnaan Ahmad of the German investment bank Berenberg has sent a letter to Tim Cook, Apple’s current CEO, asking him to buy Tesla Motors. Many investors may take that as a joke, but it has probably already been looked into.
Ahmad considers himself an expert in technology companies, and he says that if Apple bought Tesla, it could revolutionise the car industry and generate solid, recurring revenue beyond iPhones and iPads.
The electric car is probably the future, and Tesla probably has the electric car of the future, even though it still has plenty of details to polish. Everyone knows that Steve Jobs wanted to build the iCar, and somewhere in Apple’s offices there are probably countless ideas about the iCar from when Steve Jobs was alive.
So Apple buying Tesla could be one of the greatest business strategies in modern history, and at that point Apple could be unstoppable.
The other piece of unsolicited advice came from activist investor Carl Icahn, who increased his stake in Apple and asked Tim Cook to buy back 147 billion dollars of the company’s own shares, as he considers the stock heavily undervalued.
So, if we go back to the question, “Can Apple get back to 700 dollars?”, the answer is that it probably will, sooner rather than later, whatever happens with short-term speculation. Even though the results may have disappointed the market, at this price, Apple is clearly still cheap.
Featured image: Carol M. Highsmith, Public domain, via Wikimedia Commons.
