Hedge fund guy says Apple is no bargain right now (video)

“You can’t eat an iPhone. You can’t live in an iPhone. You can’t be warmed by an iPhone.” — Alphaone’s Daniel Niles.

From an interview with Niles on CNBC Thursday afternoon:

When I hear people say smartphones are a consumer staple… let’s think about that logically. Does anybody here actually think the 16.8 million people [applying for unemployment] are thinking about buying a smartphone? They’re worried about paying their rent. They’re worried about getting food. They’re worried about shelter. You can’t eat an iPhone. You can’t live in an iPhone. You can’t be warmed by an iPhone. So, at $800 on average, and a 20 multiple, I think it’s very hard to make the case that Apple’s a bargain at these levels.

Cue the video (the Apple bit starts at 5:45):

My take: Niles is a naysayer from way back.

See also: Dan Niles archives

8 Comments

  1. Kathy Corby said:
    Weekly note from Apple: “Your screen time is down 20 minutes this week… to 9 hours and 45 minutes.” This guy must not own an iPhone. I’d sacrifice a meal a day to keep my phone. Maybe two. Maybe two and a half.

    4
    April 9, 2020
  2. Gregg Thurman said:
    Nobody is going hungry that wasn’t going hungry before COVID.

    Nobody is cold that wasn’t cold before COVID.

    Nobody is homeless that wasn’t homeless before COVID

    Things may get tight for a while, but come Christmas consumers will want an excuse to feel good again, and with a lot of pent up demand consumers in all economic categories will be out shopping. That segment that buys Apple gear will be the least impacted and and will be buying more than the general population.

    I see that this is another CNBC interview of someone you’ve never heard of before, that will say anything for his 5 minutes of airtime fame.

    Drivel.

    2
    April 9, 2020
  3. Fred Stein said:
    Daniel makes one good point. As Joseph points out, he doesn’t get Apple. Apple is a bargain at today’s prices even if AAPL’s price gets jostled by macro market conditions.

    His one good point, is that there are rallies in bear markets. Ignore them if you’re a long-term investor. Play them if you think you can outsmart the market.

    2
    April 9, 2020
  4. Aaron Belich said:
    Nile’s is pretty frickin wrong. The average iPhone lasts 3.5-4 years. His $800 ASP, which doesn’t take into account carrier discounts and that the recently unemployed are blue collar / service sector employees unlikely paying day one flagship prices, is about $0.50/day for ownership.

    If they don’t upgrade now, they’ll upgrade later, either new or used. Either way, the AppleID’s will stay if they have enough reasons to.

    1
    April 9, 2020
  5. Steven Philips said:
    One big basic error. Yes quite a few people are – hopefully temporarily – unemployed who weren’t before Covid.
    But… a LOT of people – probably trending to high earners – are NOT.
    Lots of people to still buy Apple.

    0
    April 10, 2020
  6. Jonny Tilney said:
    A couple of interesting facts from Mr Niles. One, he’s thinking (as of 4/3) the market has 30%to fall. So far, S&P500 has “fallen” minus 12%.
    Two, he seems entirely happy to compare Dell and HP to Apple :-
    “Meanwhile, he’s still ready to short Apple again as the stock rallies. For one thing, he says, “I don’t know who is going to feel rich enough to buy an iPhone.” And he wonders why anyone would pay 19 times current earnings for Apple, when other hardware plays like Dell Technologies (DELL) and HP Inc. (HPQ) trade for just seven times.”

    All very odd.

    0
    April 11, 2020

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