Apple Stock Has Inflated Another Dangerous ‘Dotcom’ Bubble In The Nasdaq

Apple has been the shining jewel in the Nasdaq over the last year. Currently trading over $310, the tech giant performed an extraordinary feat for a company that was already one of the most valuable in the world, doubling in value from its lows in 2019. In line with this huge spike, economist Sebastian Galy at Nordea Asset Management told CCN he’s concerned about the real possibility that we are facing another “dotcom” bubble.

First, the bullish argument: Apple is a runaway train, flush with cash and enjoying strong demand for its wireless headphones. Throw in the fact that it’s successfully cornering the Chinese market with its smartphones and some enthusiasm about the upcoming 5G compatible iPhone 12. Combine all this with ultra-low interest rates, low inflation, and a generally positive risk environment, and it’s no wonder APPL stock is so in demand.

Over the past few years, Apple has embarked on an enormous share-buyback scheme. In 2019, ignited by Trump’s tax cuts, Tim Cook and the gang bought back an astonishing 6% of all outstanding APPL stock. Averaging 5.4% over the last few years, this both squeezes the value of the stock while also increasing the dividend the company can pay. Apple’s payout per share has increased more than 80% over the last seven years, putting even more upward pressure on its value.

With a market cap of $1.4 trillion, there is no questioning how important APPL stock is to both the Nasdaq and the stock market as a whole. With every possible fundamental pumping the price, Wall Street analysts are coming up with increasingly wild forecasts. Deja vu, anyone?