I did not see anything in your narrative that would explain why this cost of capital setting was changed. ![]() I thought these model settings should be consistent, unless something significant had changed about the company or industry. 2017 model the same setting as May 2016, and override with the same 8% cost of capital, then the resulting value per share drops $9.00 to $120.71. Professor, in your latest Apple valuation spreadsheet from Feb.2017, you had changed the assumption from your last spreadsheet valuation, from May 2016, where the Cost of Capital will be gradually changed to a Cost of Capital similar to mature companies (Riskfree rate + 4.5%).ĭo you know why you changed this assumption? I asked since if you set the Feb. Playful things to think about in any case. No market can grow to infinity, but can an owned market be so profitable for so long that one can essentially cash out all willing shareholders within an unprecedented time frame? Can aapl buy back so much stock that I'm the last shareholder standing in 20 years? Of course a market can be replaced by another - nothing is certain. Amazon, Facebook, LinkedIn (msft), are similar in that way, and I think there are some network effects that may be obvious with a company like facebook but be underappreciated related to aapl. If done well there will always be a premium available for the aggregation and simplicity. being the tickets to the market that contains products that hook into many areas of your life. I see aapl as essentially a market owner on top of all else - the iphone, watch etc. My Gedankenexperiment inputs: It is certainly no nokia or blackberry it's that model to start but with, embedded services (of nearly unlimited variety provided by a high % of external labor) on an owned platform - both hardware and software, with previously unheard of optionality (cash). ![]() Although I have a difficult time with the implied quantitative assumptions that would naturally flow from what I believe the company might be. I have a hard time with aapl, I've owned it since 2013 on value merits, but also view it differently than a "normal" company.
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