Wall Street Hates Apple More With Every Passing Quarter

A blog about business and economics.
Jan. 24 2013 11:13 AM

Wall Street Hates Apple More With Every Passing Quarter

1359043321296

If you want to understand why Apple "disappointing" Wall Street with the fourth-most-profitable quarter for any company ever is a big deal financially, take a gander above at the price:earnings ratio of three major high-tech companies.

This is a way of measuring how optimistic Wall Street is about a given company's future. Given two equally profitable companies, you're going to be more eager to own a slice of the one with the better growth potential. So the more optimistic the investor community is about a given company, the higher its PE ratio will be. And in Apple's case, as the company has grown and grown the markets have grown increasingly pessimistic about its future growth. A couple of quarters back, it started trading at a PE ratio below Microsoft's. A huge upside surprise might have killed off that pessimistic sentiment and persuaded people that they're making some kind of fundamental error, but instead Apple delivered a small downside surprise on earnings that led to a disproportionate fall in share prices and an even lower PE ratio.

Advertisement

It's a little paradoxical because even after huge recent declines, Apple is still the most valuable company in America. But make no mistake—this is a company that Wall Street really doesn't like.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

War Stories

The Right Target

Why Obama’s airstrikes against ISIS may be more effective than people expect.

The One National Holiday Republicans Hope You Forget

It’s Legal for Obama to Bomb Syria Because He Says It Is

I Stand With Emma Watson on Women’s Rights

Even though I know I’m going to get flak for it.

Should You Recline Your Seat? Two Economists Weigh In.

Doublex

It Is Very, Very Stupid to Compare Hope Solo to Ray Rice

Or, why it is very, very stupid to compare Hope Solo to Ray Rice.

Building a Better Workplace

In Defense of HR

Startups and small businesses shouldn’t skip over a human resources department.

Why Is This Mother in Prison for Helping Her Daughter Get an Abortion?

It’s Fine to Use Facebook to Serve People With Legal Papers, Court Rules

  News & Politics
Foreigners
Sept. 23 2014 6:40 PM Coalition of the Presentable Don’t believe the official version. Meet America’s real allies in the fight against ISIS.
  Business
Moneybox
Sept. 23 2014 2:08 PM Home Depot’s Former Lead Security Engineer Had a Legacy of Sabotage
  Life
Outward
Sept. 23 2014 1:57 PM Would a Second Sarkozy Presidency End Marriage Equality in France?
  Double X
The XX Factor
Sept. 23 2014 2:32 PM Politico Asks: Why Is Gabby Giffords So “Ruthless” on Gun Control?
  Slate Plus
Political Gabfest
Sept. 23 2014 3:04 PM Chicago Gabfest How to get your tickets before anyone else.
  Arts
Brow Beat
Sept. 23 2014 8:38 PM “No One in This World” Is One of Kutiman’s Best, Most Impressive Songs
  Technology
Future Tense
Sept. 23 2014 5:36 PM This Climate Change Poem Moved World Leaders to Tears Today
  Health & Science
Science
Sept. 23 2014 4:33 PM Who Deserves Those 4 Inches of Airplane Seat Space? An investigation into the economics of reclining.
  Sports
Sports Nut
Sept. 23 2014 7:27 PM You’re Fired, Roger Goodell If the commissioner gets the ax, the NFL would still need a better justice system. What would that look like?