Apple and the perceived “lofty” price targets
Amazing how a stock that trades for < 10x earnings ex-cash growing over 50% top and bottom line can be called “lofty” isn’t it? I just heard on CNBC them say once again that a $700 “lofty” price target on apple was given by an analyst.
Would they call a stock going from 53 to 70 “lofty”? Of course not. However pundits, anchors and analysts are all hypnotized by high price tags. If apple was earning half their market cap in earnings and the other half in cash on the balance sheet and somebody put a $700 target on it they would still be “high flying” or “lofty”.
These morons need to understand math, percentages and the like. However that is likely to never occur. Should apple wish to unlock value in their stock they need only do a 20 for 1 split. Bring the stock to 25/share. This way when an analysts puts a $35 target on it the news won’t go nuts over such notions as high flying or lofty. Apple above others should understand perception is reality. People in the real world go to buy things and use the absolute price tag as the determination of worth. Little is placed on “value” of the item/merchandise.
In the meantime the shock and awe of a stock hitting 500 or 600 will continue to make headlines along with various adjectives about how expensive or lofty a stock is. Apple and other co’s over 200 all need to split to double digits and get the media and pundits off this game. Or they can continue to wear high dollar price tags as badges of honor at the expense of seeing their stock undervalued. Jobs thought his stock was undervalued at 200 yet he did nothing to remedy this.
What company understood this and fixed it? BIDU. Yes a chinese company. 10 for 1 split and then a rocket ride to $140 ($1400 pre-split).