That expectations and dreams today count more than reality is becoming harder and harder to deny, just as it’s becoming harder and harder to deny that companies’ management exclusively focuses on inflating their stock prices as much as possible in the short term, neglecting medium and long-term structural business growth.
Masayoshi Son, Masaponzi for his friends, is the Master Yoda of this field. All his hyperbolic announcements that consistently ended up in spectacular failures in the past decades not only did not take a toll on his operations, but they allowed him to grow SoftBank’s Ponzi scheme beyond the absolutely insane levels reached at the very peak of the DotCom bubble, despite the fact that cracks through it are growing wider and wider (“HOW SOFTBANK IS FIGHTING BANKRUPTCY“).
When I wrote “THE REAL ERA OF AI BEGINS, THE ONE OF THE AI CHARLATANS ENDS” a few weeks ago, I assumed that the blatantly fake announcement of the 500bn USD commitment to the “Stargate” initiative marked the peak of this charade; I could not have been more wrong. Since then, every major “hyperscaler” has started to announce CAPEX commitments for the upcoming year that could hardly find any logical support from their own balance sheets, but nothing compares to the 500bn USD and 20,000 more job hires Apple just committed to in the US (“Apple will spend more than $500 billion in the U.S. over the next four years“), borrowing a page directly from Masaponzi’s playbook.
Let’s take a quick look at the numbers reported in the latest 10-Q as of December 31, 2024, to understand what degree of ridicule Apple just achieved:
- Apple reported ~30bn USD of Cash and Equivalents and a total of ~110bn USD of “Marketable Securities”.
- Current Assets minus Current Liabilities nets at minus ~11bn USD
- Shareholders’ equity stands at ~67bn USD
- Apple’s operating activities in the last quarter generated ~30bn USD of cash, another ~10bn of cash was generated by investing activities, but financing activities saw ~39.5bn USD of cash outflows (out of which ~23.6bn USD were stock buybacks) for a total increase in “cash and equivalents” of just 356 million USD in the last quarter.
- Apple’s total Term Debt stands at ~95bn USD
- Apple’s Free Cash Flow is ~100bn USD per fiscal year, roughly stable since 2021 (because the company has not been really growing since then and squandered all this cash in stock buybacks rather than R&D to preserve the long-term value of the business).
Yes, my dear reader, how on earth can Apple come up with 500bn USD in the next few years? Of course, the figure they announced is a blatant outright lie unless they completely stop buying back their own shares. Is this a possibility? Of course not, because in that scenario, Apple shares would crash down to earth in a spectacular implosion that will make history, since this and multiples expansion (courtesy of reckless central banks policies) are the only reasons why Apple shares trade where they do today.
Some people argue Tim Cook made this announcement to please Donald Trump, but do you think the US president and all his administration are that naive? Furthermore, do you think that shifting manufacturing from China back to the US is going to be beneficial for the business of the company itself? Unless the US administration will subsidize Apple to make phones in the US, something that of course has zero chance of happening, this last announcement is pure corporate idiocy and can only be seen as a desperate attempt from the company to keep feeding markets’ expectations to make sure the euphoria does not fade and everyone starts paying for Apple shares what they are really worth (approximately 70% less than the current level).
Apple isn’t alone in this situation; it’s just the latest example of an effort by all the high flyers that enjoyed the incredible market euphoria so far, but now have to come up with these sorts of things to support their valuations at nosebleed levels. Is this sustainable? Objectively speaking, it isn’t, which is why, unless central banks decide to print more money than God, this is a clear signal we are now at the very last stage of this cycle bubble (something supported by every single market metric out there too). Are we going to see a spectacular pop all of a sudden? I don’t think so because banks are the key, not tech stocks that can lose significant value without significantly crashing the market since investors will rotate into the apparently safe financials as I warned for the first time long ago in: NVIDIA WON’T CRASH MARKETS TOO MUCH BECAUSE TRADERS HAVE A BURNING HOUSE STILL STANDING WHERE THEY CAN HIDE
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