Latest Developments:
Apple (AAPL) reported 3Q24 revenues of $85.80 billion, marking a 5% YoY increase. However, despite strong performance in Europe and the Americas, the company faced challenges in China, with a 7% YoY decline in sales. The company’s iPhone and wearables segments saw lackluster growth, while services like the App Store continued to perform well. Although margins improved, operating income and net income both saw a significant decline due to rising costs, including labor and maintenance.

Investment Case:
Apple continues to struggle with lackluster growth and failed innovation. The cancellation of Project Titan (self-driving car project) and the underwhelming performance of the Vision Pro have raised concerns about the company's future growth drivers. Meanwhile, its market share in China continues to decline due to government restrictions and rising nationalism. Despite generating strong cash flow, the company’s overreliance on the iPhone and limited new growth drivers pose long-term risks. The valuation is unsustainable, with a potential downside of 17.91%.

Company's Valuation:
Using a conservative growth rate of 10%, the DCF model suggests a fair share price of $192, implying a potential downside of 17.91%. The market is pricing in unrealistic growth, and the company’s issues in China, coupled with a lack of compelling innovation, make the current valuation unjustifiable.

Disclaimer: The above is an excerpt on a report written by our close associate, Selendis Research. Check out the full report here on Seeking Alpha. All information provided is intended solely for general informational purposes. Seven Insights does not take into account individual financial goals or situations and does not provide personalized investment advice. Seven Insights is not a licensed securities dealer, broker, U.S. investment adviser, or investment bank.