The Wide, Wide World of Apple

Started by Barrister, August 24, 2009, 01:50:38 PM

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The Rivan/Apple rumor seems strange to me...especially as Amazon already has a heavy hand on the Rivian tiller...I'd have thought them a more likely buyer if Rivian gets into a desperate situation.

The Minsky Moment

Quote from: Barrister on March 07, 2024, 04:27:09 PMWell the thing is - Apple has enough cash they could buy any number of car companies - $195 billion.

GM would only cost them $45 billion.  Ford is $49 billion.  Toyota maybe not - $409 billion.

But you get my drift.  Buying Rivian for $12 billion, when they only delivered 50,000 vehicles, doesn't make a lot of sense (unless you thought their tech was worth something extra special).

Apple trades at close to 6 times revenue whereas GM trades at less than one.  So the effect of buying GM would be to weigh down Apple's stock price.  Rivian is close to 2x which is bad by Apple standards but better than GM.

That's the problem for these tech companies - their stock prices are inflated by huge revenue and earnings multiples based on assumptions of continuously high earnings growth deep into the future.  If you ballast that down by pouring capital into an old fashioned manufacturing business that bashes pieces of metal and plastic together, you risk deflating the bubble.  That's why Tesla, which is a pretty decent car company, insists that it's really an AI company. Because making cars is expensive and selling them means fighting through lots of competition for set amount of customer demand.  But ARTIFICAL INTELLIGENCE could be worth quintillions and you just need a some coders, a shitload of NVIDIA chips, your own power plant, and a giant hype machine.
The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.
--Joan Robinson