Why Apple guide down is SO important, and it is not just about AAPL…

AAPL grey

AAPL just dropped a bad earnings guide-down. Unfortunately, it is not about AAPL!

What Apple did do though:

  1. 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.
  2. and, yes, unfortunately, Macro is slowing down, including China
  3. 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…
  4. 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.
  5. 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).

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Why Apple guide down is SO important, and it is not just about AAPL…

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