Our Valuation Assumptions for Apple (Valuentum) Our Discounted Cash Flow Valuation of Apple
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We recently made a few changes to our valuation model of Apple, and the Vision Pro may very well end up being another winner for the company. From what we can tell, there are a significant number of possible applications of the Vision Pro. Granted, estimating the total market opportunity for a $3,499 device like the 'Vision Pro' is a difficult one, but we expect Apple's annual numbers come next year to be impressive, regardless. The Vision Pro is expected to be available in early 2024 and will compete in many areas with the Meta ( META) Quest. We were impressed with the 'Vision Pro,' Apple's first major product launch since the release of the Apple Watch nearly a decade ago. Then there's the Apple 'Vision Pro,' which was unveiled at the company's Worldwide Developers Conference on June 5. In some ways, at least from a personal level, I haven't made the switch to Apple wearables, as the Fitbit, now owned by Alphabet ( GOOG) ( GOOGL), remains relevant, but this may be an inevitability for me, too. I can't foresee myself buying a tablet that is not an iPad. On a personal level, I can't foresee myself buying another phone that is not an Apple product. Apple's products are simply amazing, and people are hooked.and likely for life. One might even put the iPhone near the base on an updated 'Maslow's Hierarchy of Needs' image. We tend to agree with Uncle Warren on his main point: People's phones are more important than even things like their second car.
We don't have anything like that that we own 100% of…but we're very, very, very, happy to have 5.6% or whatever it may be percent (of Apple), and we're delighted every tenth of a percent that it goes up. Apple has a position with consumers where they are paying $1,500 or whatever it may be for a phone, and these same people pay $35,000 for having a second car, and if they had to give up their second car or give up their iPhone, they'd give up their second car. And we put a fair amount of money in it…and our railroad business is a very good business, but it is not remotely as good as Apple's business. Our criteria for Apple isn't different than the other businesses we own it just happens to be a better business than any we own. They keep buying their stock instead of our owning 5.6%, if they get down to…15.25 billion of shares outstanding, without our doing anything we got 6%. The good thing about Apple is (Berkshire) can go up (in our ownership stake). Here's what the Oracle of Omaha had to say about Apple at Berkshire Hathaway's ( BRK.A) ( BRK.B) annual event: From where we stand, Apple is not going anywhere in the longer run, and mom and dad will continue to shell out money for more and more Apple products, not only for themselves but for their kids, too.Įven Warren Buffett gets it. Toddlers everywhere aren't asking for their "tablets " they are asking for their "iPad." Apple is so entrenched within the customer psyche these days that it would take a cataclysmic event for the company to get dislodged. In some ways, the iPad may have become the name for a tablet, much like Kleenex has become the generic name for tissues. They're really not looking at anything else out there. There's another, perhaps overlapping, cohort that only consider the iPad for a tablet, too. These people are hooked on Apple ( NASDAQ: AAPL) products.
Let's face it: There is a whole cohort of consumers that don't even care about phones that aren't the iPhone.
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