AAPL just dropped a bad earnings guide-down. Unfortunately, it is not about AAPL!
What Apple did do though:
- Apple just gave other companies a moral permission to blame Macro/China. So, we will see many more negative earnings revisions from the Global companies, including Technology.
- and, yes, unfortunately, Macro is slowing down, including China
- it told us that cheap P/E multiples are irrelevant when margins are inflated/all-time high. A company with a market cap of $1TR can’t be cheap on any multiple. It is just grossly over-earning…in terms of earning if margins are cut by half, its P/E would go up to 30+, if margins are shaved by 3/4, then P/E multiples goes to 100+… You have to normalize margins, and in Technology there is no such thing as normalized margins. It is either feast or famine…
- negative earnings revisions tend to recur. Therefore, statistically speaking, AAPL likely to guide down at least 2 more times next 1-2 years. This could possibly be the beginning of the End. I am sorry to say that.
- our TenViz tools did tell clients to sell AAPL on October 29, 2018, close to the all-time high of $211 (see the screenshot below).
Comments pls?
