Apple Is Valued at $440 For Each Of Its Users

Horace Dediu has an interesting little speculation about Apple 's numbers over here. There's always going to be a number of assumptions in any playing around like this and some of those assumptions will be supportable, others less so. The general result is that the market is valuing Apple at about $440 for each user of Apple equipment. While I doubt that's exactly right (see above about assumptions) it's a useful enough number. Especially when we consider that it was more like $1,200 per user not so long ago:

It shows that for a number of years—from 2009 until late 2012—Apple’s users were valued (implicitly by the stock market) as likely to create a net present value of about $1200 in earnings. The current value is about a third of that, or $440 in earnings. Today’s expectation is therefore that each current customer will buy the equivalent of 1.8 iPhones. And nothing more, ever. A few months ago it was expected that each customer would buy three times as much.

Not quite, not really. What's being said is that the future margins to be made off the users is going to be about what is currently made off 1.8 iPhones. That's a little different from saying that those users are only going to spend the equivalent of 1.8 iPhones with Apple in the future.

Indeed, given the current concerns about whether Apple can maintain its (for the industry, quite astonishingly vast) margins into the future this seems to be a sensible way of looking at it. People's opinions of Apple sales into the future don't seem to have changed very much recently: their assumptions about the margins Apple will make off those sales have.

But the most interesting thing I would take from this is the very strong reminder that stock markets are forward looking beasties. No one denies that Apple is doing spectacularly well: nor that they're going to continue to dominate several niches in the tech market for years to come. But simple concerns about the margins at which they will do so (please note the "will do") in the future are sufficient to halve the stock price near enough. Markets can be wrong of course: but the really important thing to remember about stock markets is that they are predictions (possibly the best we have but predictions all the same) of the future, not a statement about today or the past.