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Friday, January 27, 2012

Apple has room to grow

Anyone who thinks AAPL has no more room to grow is just wrong.

BCG was commissioned by Google to explore the economy of the web.

The main point of the study:

1. To grow from $2.3tn to $4.2tn thanks to mobile internet access.

2. By 2016 about 80% of all internet users will access the web using a mobile phone.

3. In four years 3bn people will be using the internet, or nearly 50% of the world's population.

The most striking theme to growth is mobile. While mobile is important to Google, it's currently a source of slower growth, with a CPC at -8% for the quarter due to mobile.

But another company proved they are the best positioned for the mobile web, and that's Apple.

The majority of 80% growth in mobile web will come from lower end users. Apple, currently, is only addressing the lower end user with the 3GS. As the newer iPhones emerge, the iPhone 4 will be offered free, globally, across multiple carriers.

Even though the report was commissioned by Google, and Google will benefit from the trend, it will mostly benefit AAPL.

(apologies for the raw link, I'm writing this on my iPhone)


  1. I wonder if you'd be kind enough to assist me once more.

    I've been short NFLX for many months--disastrously, happily, and now disastrously again. (It governs my results as AAPL, apparently, once did yours.)

    I was heartened by your recent indication that its upside was likely limited here; but it's perhaps outperformed your expectations. I'm wondering, specifically, whether I'll need to cover shortly.

    If you could provide me any insights, I'd be most grateful.

  2. Anonymous,

    What is your baseline fundamental analysis on NFLX? Whats you expectation on subscriber growth? How do you value the company?

    If you do not have answers to these questions, then my post should have raised questions to your short position. Especially, as I provided a technical momentum assessment for you that indicated the stock would most likely appreciate to higher resistance levels from Jan 7th.

    I then provided the blueprint of how I would conduct the fundamental assessment on NFLX. I made clear in the post I do not trade NFLX and do not have this assessment, hence did not provide an expectation other than the technical momentum.

    If you don't have 'fundamental' reasons for a trade, your already trading at a disadvantage. Fundamental events bring a stock into new trading patterns. Any trades I take on, I have fundamental reasons for them, that is why I have conviction in them when the technicals appear to break down.

    Sometimes, the market is very inefficient and just goes the other way. For instance, FIO was a loser for me last week, despite having really good numbers. But NFLX seemed to have a fundamental reason to break resistance.

    The only insight I can give you is to tell you there was a fundamental event (earnings) that provided investors with new inputs (margins, sub growth, rev growth etc) to their models. If the current inputs were more bullish then your expectations, then your short thesis is falling apart.