Why Is Apple Stock So Cheap?

Apple Inc. (AAPL) shares are down more than 30% from their all-time highs, but some analysts still see the stock as a bargain.

Checkout this video:

Introduction

On August 13th, Apple’s stock price reached an all-time high of $238.57 per share. Just two months later, the stock is trading at $142.19 per share, a 40% decline. Many investors are wondering why Apple’s stock has fallen so sharply and whether now is a good time to buy Apple stock.

There are several reasons why Apple’s stock may be trading at a discount today. First, the global economy has been weak recently, which has led to lower demand for consumer electronics like the iPhone. Second, the iPhone 7 was released to lukewarm reviews and many consumers are holding off on upgrading until the next generation of iPhones is released. Finally, Apple is facing increased competition from rivals like Samsung and Google in the smartphone market.

Despite these challenges, there are also several reasons to be bullish on Apple stock. First, Apple is still the most profitable company in the world and its products remain extremely popular with consumers. Second, Apple is making a major push into new markets like virtual reality and autonomous vehicles, which could lead to significant growth in the future. Finally, with a market capitalization of $696 billion, Apple is still one of the most valuable companies in the world and its shares could rebound once investors become more confident in the global economy.

The History of Apple Stock

Apple Inc. is an American multinational technology company headquartered in Cupertino, California, that designs, develops, and sells consumer electronics, computer software, and online services. The company’s hardware products include the iPhone smartphone, the iPad tablet computer, the Mac personal computer, the iPod portable media player, and the Apple Watch smartwatch. Apple’s consumer software includes the macOS and iOS operating systems, the iTunes media player, the Safari web browser, and the iLife and iWork creativity and productivity suites. Its online services include the iTunes Store, the iOS App Store and Mac App Store, Apple Music, and iCloud.

Apple was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne in April 1976 to develop and sell Wozniak’s Apple I personal computer kit. The Apple I kits were computers single-handedly designed and hand-built by Wozniak and first shown to the public at the Homebrew Computer Club. The Apple I was sold as a motherboard (with CPU, RAM ,and basic textual-video chips)—a base kit concept which would be followed by many hobbyists for years to come. The success ofApple I started Jobs’ career in electronics. Wayne sold his share ofthe company backto JobsandWozniakfor$800 only twelve days after itwas founded; he receivedseveral thousand dollars for his engineering work onthe original prototype.[10] In 1978Apple began sellingthe Apple II,[11] one of themost successful mass-produced microcomputers ever made.[12][13][14]

With a price tag of US$1,, it was aimed at serious hobbyists and engineers rather than sales to households as was common among its competitors at that time such as Commodore’s PET , Radio Shack’s TRS-80 , or Atari ‘s 400 800 . Unlike later Commodore PET or TRS-80s , however,[17] each key onthe Apple II keyboard activated its own Dedicated monitor chip so that each character typed appeared onscreen immediately—a process much faster than using a via an external video terminal
Why Is Apple Stock So Cheap?The History of Apple Stock

The Recent Performance of Apple Stock

Apple Inc. is an American multinational technology company headquartered in Cupertino, California, that designs, develops, and sells consumer electronics, computer software, and online services. The company’s hardware products include the iPhone smartphone, the iPad tablet computer, the Mac personal computer, the iPod portable media player, the Apple Watch smartwatch, the Apple TV digital media player, and the HomePod smart speaker. Apple’s software includes the macOS and iOS operating systems, the iTunes media player, the Safari web browser, and the iLife and iWork creativity and productivity suites. Its online services include the iTunes Store, the iOS App Storeand Mac App Store, Apple Music, Apple TV+, iMessage, and iCloud.

Apple was founded by Steve Jobs, Steve Wozniakand Ronald Wayne in April 1976 to develop and sell personal computers. It was incorporated as Apple Computer Inc. in January 1977 and was renamed as Apple Inc. in January 2007 to reflect its shifted focus towards consumer electronics. Between 1997 and 2002,[17] it attempted to create a separate operating system called Mac OS X as an evolution of its classic Mac OS operating system which had been released in 1984,. but it became possible to successfully run Mac OS X on non-Apple hardware after some hacking within a few months of its initial release in March 2001,[18][19] which led to serious allegations by various media sources thatApple was stifling innovation withinthe Computing industry at that time.[20][21][22] Ars Technica columnist John Siracusa has written that while “it may have seemed easy enough … doing something completely different from what had come before required taking some very large risks.”[23] The cost of this venture amounted to almost $100 million[24]between 1996and 1998,[25][26]while total revenue for fiscal year 1997 was $2.74 billion.[27][28](This would be about $4 billion today.)

After several years of steady losses,[29]”stdDev*”===”-9.633333″&&(e+=”

Income from continuing operations for fiscal years 2013 through 2017 was as follows:

Fiscal year Income from continuing operations (in millions)
2013 $37,037[58]
2014 $39,510[59]
2015 $53,384[60]
2016 $57,816[61]//What is stdDev? What is e?

The Future of Apple Stock

Apple stock is trading at a relatively low price compared to other companies in the tech industry. Some investors are concerned about the future of the company, given its struggles in recent years. However, there are reasons to believe that Apple stock is undervalued and that the company has a bright future ahead.

One reason for optimism is Apple’s strong financial position. The company has nearly $250 billion in cash and investments, and it generates billions of dollars in free cash flow every quarter. This gives Apple the flexibility to invest in new products and technologies, or to return cash to shareholders through share repurchases and dividends.

Another reason to be bullish on Apple is the iPhone. Despite concerns about saturation in the smartphone market, the iPhone remains extremely popular with consumers and is a major source of revenue and profit for Apple. In addition, services like the App Store and iCloud are growing rapidly and are becoming increasingly important sources of revenue for the company.

Finally, many analysts believe that Apple stock is undervalued at its current price. Based on various valuation metrics, Apple stock looks cheap relative to other stocks in the market. This could mean that there is significant upside potential for investors who buy Apple stock today.

Why Is Apple Stock So Cheap?

Apple Inc. (AAPL) is currently trading at around $92 per share, down from its 52-week high of $145. This begs the question, why is Apple stock so cheap?

There are a few possible explanations. First, iPhone sales have plateaued and even declined in recent quarters. This has caused investors to worry about Apple’s future growth prospects.

Second, the overall stock market has been quite volatile lately and this has caused many investors to sell their stocks, including Apple.

Lastly, it’s possible that investors are simply underestimating Apple and its potential for future growth. Only time will tell if this is the case.

The P/E Ratio

One reason apple stock may be cheap is because of the P/E ratio. The P/E ratio is a measure of the price-to-earnings of a company. In general, a higher P/E ratio means that investors are willing to pay more for the stock. As of this writing, Apple’s P/E ratio is 11.92, which is considered low when compared to the average P/E ratios of other companies in the same industry. For example, the average P/E ratio for companies in the computer hardware industry is 17.54. This means that, on average, investors are willing to pay $17.54 for every $1 of earnings for companies in this industry. Considering that Apple’s P/E ratio is lower than the average, this could be one reason why the stock may be considered cheap.

Dividend Yield

One reason Apple stock might be considered “cheap” is its dividend yield. As of this writing, AAPL stock yields about 1.6%. By comparison, the average dividend yield of stocks in the S&P 500 is about 2.1%. So, based on dividends alone, Apple stock looks like a relative bargain.

Of course, there’s more to a stock’s price than its dividend yield. But for income-focused investors, a higher dividend yield is always going to be one of the key criteria they use when searching for cheap stocks.

Apple’s Cash Hoard

Apple’s massive cash hoard is one of the main reasons why the stock is so cheap. As of the latest quarter, Apple had $246 billion in cash and investments on its balance sheet. That’s more than enough to buy back all of the outstanding shares of the company.

At Apple’s current share price, the company’s market value is around $800 billion. So, Apple could theoretically buy back all of its shares and still have $550 billion left over in cash. That would leave Apple with a very strong balance sheet and plenty of dry powder to make acquisitions or give shareholders a massive dividend.

The Bottom Line

Apple Inc. (AAPL) has been trading at historically low price-to-earnings (P/E) ratios, particularly when compared to the overall stock market and its own recent past. There are a number of reasons for this, including concerns about the company’s future growth prospects, fears that the iPhone may have reached peak popularity, and the possibility that Apple will be forced to cut prices on its products in response to increased competition. While some of these concerns are valid, they do not appear to justify the discount at which Apple shares are currently trading. In fact, there are several reasons to believe that Apple stock is undervalued at its current level and that it represents a good buying opportunity for long-term investors.

Scroll to Top