Tuesday, November 6, 2012

Apple Inc, from an investment perspective

Short Apple. That's my short of the decade. This ain't gonna pay off in 3 months or even a year, but given that Blogger doesn't go down in 10 years, I'm pretty sure this post will look very good by then.

Which is crazy. AAPL trades at $587 today, and the company is posting a $44 eps, making its PE2012 13.3x. Given that it's usually a bad bad idea to short anything 13x historical PE, let alone a tech stock, this is a pretty whacked trade. Let's say Apple posts zero growth in the upcoming year, it's still trading at forward PE2013E 13.3x. fuck. looks like shorting it is dumb. 

But what about in 10 years? Given my firm belief that Apple has seen its peak and its innovation died with Steve Jobs, I'd say this company is going down the shithole and it's just a matter of time. It has its huge cash pile now, but one day it'll burn out. When iPad 10 looks exactly like the 9.7" brick we see today, and when iPhone 10 continues to play behind the curve, that cash will burn out. 

Going back to the short trade, and why it's dumb. It's only dumb if a short squeeze is in the coming, meaning the short will incur huge fucking loss before seeing the light of day, and meaning that there will be a better time to short in the future. But what exactly is gonna push this company forward from this point on? Tim Cook is great at doing what he does which is pennypinching, which is great for the bottomline today, but he's made all the possible wrong decisions in terms of innovation. (yes taking the DVD off the iMac to make it slimmer is one of them. The man clearly doesn't know Blurays still sells pretty well.) My belief is that Apple has lost it, and if I am right, then there's nothing on earth that can push its stock price higher, from this point on. 

So, maybe the time is now and maybe one just needs to bite the bullet and short a 13x PE tech stock. But hey, at least borrow will cost you next to nothing.


Footnote: i'm not even gonna promote this post on Twitter or Facebook cuz I don't need to start a flame war. If you somehow came across it and read it, thank you. If you want to comment, please make it constructive. 

2 comments:

Anonymous said...

Nice call (at least for this week)...but very profitable if you closed out your position.

Phil Lau said...

shorting this to the ground my frd.