Falsifying the state of AAPL. Selling the "Apple is doomed" rhetoric. #Apple $appl

Published in Apple

Ok, so this post is long overdue (three years) but is still seams as relevant today as the times I saved two random screen grabs to my desktop.

So here they are; Two screenshots which <don't> prove Apple is Doomed.

The stock market doesn’t understand Apple (stock ticker AAPL) and apple investors these days aren’t seeing anywhere near the benefit they should. I know, I was an investor. I chose Apple because I understood just how exceptional they are as a company and thought I might get a reasonable benefit from investing in the company.

I didn’t realise though, how much institutional determination existed to keep the stock price down. I’m not trying to imply that it’s intentional (although I have seen how many believe it is) but Apple’s share price nowhere near reflects it’s business accomplishments.

Here are a couple of screen grabs which go some way to show why the sentiment (which is, after all, the only thing in the stock market that matters) is negative toward AAPL. Although both were taken way back in 2013, I see similar things going on today, a constant flow of negativity towards Apple’s future financial outlook centered around the rhetoric that Apple has nowhere to go but down (Apple is doomed).

Screenshot one: Google overtakes Apple as the more valuable company

Google vs Apple Market Capitalisation Graph from the Wall Street Journal
Google vs Apple Market Capitalisation less net cash - Graph from the Wall Street Journal

 This screen grab (from an internet article indicating the source was the Wall Street Journal) shows how Apple had fallen and Google had overtaken it at the worlds most valuable company. Just look at that jaw dropping ORANGE LINE OF DOOM. But if you pay closer attention you can see the metric measured here is the Market Capitalisation LESS NET CASH (emphasis mine). You don’t even need to be good at maths to see this makes no sense whatsoever. The Market capitalisation is the total value of all the shares, it’s not the best measurement of a company by any means, but because it’s reletave to the current share price it’s a reasonable way to observe a companys worth. The problem I have is with the "less net cash" bit. Thats. Just. Stupid. Seriously, who would subtract the net cash on hand? If I asked you which was more valuable; Company A - worth a million dollars, or Company B - also worth a million dollars but with huge pile of cash in the bank? What would you say? Seriously? The truth is the market capitalisation is one thing, the net cash on hand is another. If you were trying to get a general overview and wanted to bring these two metrics together, there would only be one sensible way, by adding them. That drop you see in the graph was not because Apple was failing, at the time Apple was filling its bank account with cash. Which works against it in this manipulaive graph. The article was all doom and gloom for Apple. Watch out shareholders!

Subtracting cash from a companys net worth is so stupid it should never make it to publication. There should be an army of intelligent people with basic math skills to confirm it makes absolutely no sense. And yet, this was published by the Wall Street Journal. Why? Because they do know value, the value of bad news about Apple, even if you have to make up crazy shit to sell it.

Speaking of crazy shit. That brings me to Bloomberg… (or perhaps the mis-representation of their data)

Screenshot two: Bloomberg and the graph every schoolchild should facepalm to.

 

Bloomberg data being used to misrepresenting Apple shares (AAPL)
Bloomberg data being used to misrepresenting Apple shares (AAPL)

 

This screenshot is the a great example of how you can tell a lie with the truth. To be fair, I can’t remember if it was a Bloomberg TV spot, or just Bloombergs data referenced (if it were the latter and I was Bloomberg, I’d be pretty pissed). As you can see the headline is “Incredible Shrinking Margins”, all about a huge drop in Apple’s gross profit margins. It’s in-your-face data mis representation at its best. Teachers should use this to show students how to fabricate bullshit from real data. At first blush it looks like Apples margins have dropped off from healthy (green) to next to nothing (colourless, grey). It was onscreen for all of about 2 seconds. Giving the viewer no time for closer inspection. But the graph is conveniently truncated at 35.39%, very close to 36.60% The shortened graph seams to spell certain doom as it looks like Apples profit margin appears to be dangerously close to dropping into a loss. If they had have created the graph showing the bars all the way from zero then you could see that the margins had contracted only a couple of percent off the mean. In fact, the graph actually shows Apple had already previously bounced back from other drops.

Yea. But that wouldn’t be sensational would it? Apple is after all “Doomed”!

So, sorry that this post comes years after the screenshots. I’m no longer an APPL shareholder. Apple continues to make great products and earn fantastic revenues but this misalignment of the share price to company’s performance made it frustrating to be a shareholder. If I was still a shareholder, I have no doubt I would continue to see the same data misrepresentations and lies created to bait social media, buy views and sell advertising.

As it happens. I finally made this post because I was cleaning up my desktop, that’s where the screenshots have been sitting all this time.