Tag Archives: Double
Warren Buffett said the following:
I call investing the greatest business in the world … because you never have to swing. You stand at the plate, the pitcher throws you General Motors (NYSE:GM) at 47! U.S. Steel (NYSE:X) at 39! And nobody calls a strike on you. There’s no penalty except opportunity lost. All day you wait for the pitch you like. Then when the fielders are asleep, you step up and hit it.”
I distinctively remember Apple (AAPL) at around $ 90 a share back in 2016. Sentiment was on the floor, commentary was circulating on mass that iPhone growth was history. Fast forward a couple of years and shares have more than doubled. I suspect few would have thought that AAPL would have recovered so quickly. However as the chart illustrates below, AAPL also suffered a steep decline in 2013 but came roaring back to life soon thereafter. Why didn’t investors “trust” the charts instead of one or two disappointing earnings reports? Hindsight is 20/20, as they say.
Then we have Gilead (GILD). Shares collapsed to close to $ 60 a share last year and have been very slow to gain momentum since then. Granted Gilead’s shares collapsed more than Apple’s and over a much longer time frame, but you can be sure that many investors doubled down on their positions or bought at levels much higher than the present share price. Apple and Gilead before these share price declines relied mostly on one product which was obviously the iPhone in AAPL and HPC cures for Gilead. So why did one stock bounce back strongly whereas the other flattered to deceive?
I think these articles are helpful because it is at these inflection points where the most fortunes are made. With AAPL, for example, you had the likes of Buffett joining the party, but then you had the likes of Carl Icahn who ran for the exit. Now both of these billionaires made a lot of money but Icahn as we can see now sold far too early.
Buffett also has stated.
“Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.”
The problem though is that everything is so easy in hindsight. AAPL’s top line sales have come roaring back to currently stand at $ 247.41 billion over a trailing 12-month average. Gilead’s top line sales growth has deteriorated to currently stand at $ 24.69 billion (almost $ 8 billion down from its 2015 high).
Many newsletters got Gilead wrong which is why one should always make their own investing decisions. Why? Because an opinion backed by research and hours of study usually means one will stand by the position even if the going gets tough for a while. Gilead never rebounded because it ultimately cured hepatitis C. I wrote more about this here but many were caught out on this at the time.
Here though was the skinny compared to Apple. Although Gilead was generating strong cash flows from the likes of its HCV and HIV divisions, there was absolutely no link between the two segments. These two diseases are totally different and one cannot “lift up” the other, so to speak, when the likes of HCV is struggling.
We cannot though say the same about Apple. I remember its March quarter in 2016 when revenue collapsed by 13% to print the worst top line quarter since 2003. The main culprit was of course iPhone unit sales which were down 16% over a rolling quarter basis. However there were a number of reasons for the decline both in dollar amount sales and iPhone unit sales. Softness in China, currency headwinds plus also a poor product mix led to the disappointing quarter. Shares headed toward $ 90 as investors ran for the exit. However the launch of the iPhone 7 in September kept the purists hopeful.
However it wasn’t that model that turned the tide for AAPL. It was the fact that smartphone growth was still in an uptrend (still is to this day) and Apple was working really hard in the background to both coax customers from Android (through the likes of the iPhone SE) while also tie in customers more and more into its ecosystem of products. Just remember the strength of AAPL’s ecosystem today will dictate the strength of sales in the future. Gilead never had this competitive advantage and its results demonstrated this.
So when the next blip occurs, we will look at the strength of that ecosystem to see how growth rates are faring in other products. It’s all about engagement and loyalty going forward. These metrics are probably the best ones to measure when the inevitable happens and iPhone growth slows once again. As for Gilead, there still seems to be no catalyst in the cards to help growth. AAPL despite its valuation and snap back rally continues to look a far better long contender here.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
MUNICH (Reuters) – BMW will not change its strategy on autonomous vehicle testing despite the death of a pedestrian struck by a self-driving car during tests by ride-hailing firm Uber [UBER.UL], senior executives said on Wednesday.
The German carmaker added it would double the size of its autonomous vehicle testing fleet to around 80 this year.
“Our estimation about autonomous driving technology remains unchanged even though this appears to be an extremely regrettable accident,” Klaus Froehlich, BMW’s board member responsible for research and development, said of the fatality. [nL1N1R1168]
“The path to autonomous driving is a long one. I have spoken about a mission to Mars,” he said, adding BMW was conducting its own tests under a high level of security.
Froehlich said BMW’s self-driving cars would undergo a test regime equivalent to 250 million driven kilometers (155 million miles).
Of this, 20 million km will be on real roads, while a giant supercomputer will simulate traffic scenarios in a virtual test regime equivalent to 230 million kms, Froehlich explained.
Self-driving cars will appear sooner if cities dedicate special lanes for autonomous cars in ring-fenced areas.
“In a dedicated space for only autonomous vehicles, it is easier to anticipate what other vehicles and traffic will do,” Froehlich said. “This makes it easier to program vehicle reflexes and may even allow a car to have fewer sensors and less processing power than a vehicle which needs to navigate normal traffic with things like bicycle couriers.”
BMW plans to launch an autonomous vehicle in 2021. Introducing a vehicle earlier than this is not plausible, since chipmakers and software designers have not yet developed a computer capable of processing the sheer volume of data generated by a self-driving car, Froehlich said.
BMW is preparing for a new era of on-demand mobility where customers locate and hail vehicles using smartphones. Ride-hailing and car-sharing could be replaced by fleets of autonomous cars, once self-driving cars are roadworthy, Froehlich said.
Reporting by Edward Taylor; Editing by Mark Potter
… is expected to highlight the growth of Single’s Day and the success of new business lines, such as its cloud computing and data center businesses.
Cyclists love to bitch about the unnecessary weight involved with carrying a quality u-lock, but those same riders also really hate having their bikes stolen. So if you could incorporate a red light into a bike lock, saving a little weight and adding functionality, that really wouldn’t be a bad thing.