Pro: ‘Apple is the most overpriced tech stock that exists’

on Nov 4, 2021
  • Satori Fund's Dan Niles picks Facebook and Google over Apple Inc.
  • He says Apple's growth relative to the multiple doesn't make any sense.
  • Niles sees Epic Games' victory over Apple as a big blow to the tech giant.

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A month after Loup Ventures’ Gene Munster said Apple Inc (NASDAQ: AAPL) could be a $200 stock, Satori Fund’s Dan Niles blasts it as the “most overpriced tech stock that exists”.

Niles defends his bold call on CNBC’s ‘TechCheck’

On CNBC’s “TechCheck”, Niles said the other tech giants are growing much faster, yet many of them have stocks that are trading at a lower multiple than Apple.  

If you look at Apple’s growth relative to the multiple, it just doesn’t make any sense. Its revenues compounded over the last five years, including this calendar year, have grown about 11% versus Microsoft at 15%, Google at 23%, Netflix at 27%, Amazon at 28%, and Facebook at 34%.

According to Niles, Facebook and Google are better picks at the moment since much of Apple’s growth is attributed only to the global pandemic. The iPhone maker last week blamed supply chain constraints for lower-than-expected revenue in the fiscal fourth quarter.

A hit to Apple’s services business could be catastrophic

Apple recently lost the court battle to Epic games on a crucial front that Niles sees as a big blow to the tech giant since its services segment is the Atlas holding the multiple up. Considering the hardware business is “flat to declining”, a hit to Apple’s services business, he added, will make it hard to justify the stock price.

It’s pretty clear that all these companies are trying to get the take rates down. You’ve got pressure across the globe on that 30% rate upfront that Apple is charging. If those numbers start to come down, this multiple is going to have a big problem.

It’s conceivable, as per Niles, that Apple will invest heavily in metaverse since “that’s where every company is headed” but said Facebook is a better investment to play the space.


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