With shares of Apple currently trading at a 52 week high of $185, one has to wonder how much higher it can go in light of reports that Apple may soon recognize all revenue from iPhone sales at the time of purchase, instead of spreading it out over a period of 24 months.
Stevan Sidahmed of Seeking Alpha writes that it’s not unfathomable for Apple’s share price to continue to skyrocket, and that it may very well double in price in the coming months.
Under current GAAP rules, for Apple to meet analyst expectations for 2010 they only need to sell as many computers and iPods as they did in the first 3 quarters of 2009. No iPhones need to be sold to meet analyst expectations…
As I said in my last article, “Apple’s iPhone Subscription Accounting Leftovers,” should FASB approve the accounting rule change, Apple would post 2010 earnings exceeding $12 on top of the nearly $4 in deferred iPhone earnings for total GAAP earnings of $16.
A forward P/E of 20 to 25 on GAAP earnings of $16 equates to a share price of $320 to $400 and cash has not even been discussed. As of Q3 2009, Apple had over $31B, or $35/share in cash and equivalents. By the end of FY2010, Apple should have over $45B in cash, equal to $50/share.
So, even after more than doubling from less than $80/share to over $180/share, Apple can still double – again.
There’s also a rumor floating around that has Apple purchasing back a good chuck of its own shares, which would make Apple shares that much more stronger. Last we heard, Apple has no intention of splitting its shares anytime soon, but if the stock continues its upward trend, it’ll be interesting to see if Apple has a change of heart or if it decides to go the way of Google and ride its stock price into the hundreds without even looking back.