>These notions lend people to conclude that what is currently happening with Apple might not be sustainable. Gruber has been consistently wrong the last few months (in fact he is always as he predicts little but Apple growth) with regards to the decrease in share price and failure to develop new market share.
Apple wasn't priced as a growth stock, though. If a non-tech company had their kind of growth, the P/E of the stock would be well above 50. Apple, at their highest profit growth, had a P/E of 18. That's basically a normal P/E.
Is Apple's growth going to slow? Sure, that's inevitable. But Apple wasn't priced to grow to begin with.
I don't want to run in to a discussion on economic theory, but P/E has to be taken with a pinch of salt when looking at large firms.
Risk is the important thing for investors, P/E is normally a measure of value vs Growth expectation, but the Price will always be waited by the risk.
No matter how you cut it, people expected something from Apple with the stock valuation of last year. People are worried there is a trend of Apple loosing its ground, even loosing its after sales prodcuts things like music for example for Spotify.
I'm not suggesting that everyone assumed explosive growth, and $1400 a share by 2014, just that share prices are based on future expectation, not present state.
People (well the market) obviously that to be something more than they do now.
Apple wasn't priced as a growth stock, though. If a non-tech company had their kind of growth, the P/E of the stock would be well above 50. Apple, at their highest profit growth, had a P/E of 18. That's basically a normal P/E.
Is Apple's growth going to slow? Sure, that's inevitable. But Apple wasn't priced to grow to begin with.