Chart of the day, Apple valuation edition
Andy Zaky at Bullish Cross has a great post on Apple's valuation, showing the astonishing degree to which the market is discounting the value of a dollar of Apple's earnings today, compared to just two years ago. Back then, it was worth $32; now, it's worth just $13.
Context & Ripple Effects
Andy Zaky at Bullish Cross has put a number on what Apple watchers have grumbled about since the 2008 selloff took the stock under $90: the multiple keeps compressing no matter how fast earnings grow. A dollar of Apple's annual profit commanded $32 from the market two years ago; it fetches $13 today. Felix Salmon flags the chart as his pick of the day, giving an independent blogger's valuation work mainstream circulation.
The framing matters because Apple has always been one of the most heavily traded consumer stocks around — retail traders built whole strategies on event windows like the Macworld keynote effect — yet the company still trades at a deepening discount to its own earnings power.
First-order effects
- AAPL holders are absorbing a roughly 60% collapse in the price paid per earnings dollar in two years, meaning the stock's performance now depends almost entirely on earnings growth outrunning multiple compression.
- Zaky's analysis hands the bull camp its core exhibit: the market is pricing Apple's earnings as if they were worth less than half what they fetched at the end of 2009.
Second-order effects
- A gap this wide between fundamentals and price invites competing research narratives — expect more bull-case writeups arguing the discount is irrational, and pressure on Apple to justify the multiple through product or capital-return moves.
- Analysts and funds positioning around the discrepancy turn Apple into a battleground stock, where each quarter's results get argued as evidence for re-rating rather than just reported.
Third-order effects
- If the pattern holds across large-cap tech, sustained earnings growth will stop earning multiple expansion, structurally capping valuations and shifting the debate toward whether hardware-driven profits deserve terminal-value discounts.
- Independent blogs doing original valuation math — Bullish Cross here — are becoming agenda-setters that mainstream financial commentators amplify, changing where the market's arguments start.
The trend: Investors are paying steadily less for each dollar of big-tech earnings even as those earnings compound, turning valuation compression into the defining argument over Apple and its peers.