How High Can Apple’s Share Price Go?

Good morning. On our radar: Today is the deadline for Uber and Lyft to comply with a California law requiring them to start treating their drivers as employees. The companies have said they may be forced to shut down ride-hailing operations in the state if the deadline isn’t extended. (Was this email forwarded to you? Sign up here.)

Apple became the first U.S. company to hit a $2 trillion valuation yesterday, two years after it was the first to cross the $1 trillion threshold. How high can it go?

Analysts can’t keep up. The run-up in the iPhone maker’s share price has outpaced the predictions of even preternaturally bullish sell-side analysts. The median price target for the company’s stock is around $450, according to S&P Capital IQ, or 3 percent lower than its most recent close. Still, two-thirds of analysts have a “buy” or “outperform” rating on Apple, though the highest price target is only about 10 percent higher than where it trades now. (Four brave souls have “sell” or “underperform” ratings, with the lowest price target projecting a 60 percent decline.)

Is the valuation justified? Although Apple’s recent financial results have been robust, its valuation — as measured by its price-to-projected-earnings ratio — is its highest in more than a decade. Investors are paying more for each dollar that Apple expects to earn, believing either that the company could make even more money in the future or that any sort of earnings growth in this market is worth a premium. The latter seems a popular belief, with tech giants benefiting from people’s increasingly digital lives during pandemic lockdowns, while most other sectors are struggling through the worst recession in generations.

Apple’s stock has made a lot of people rich. It’s not exactly daring to invest in the biggest company in the market — though it is unusual for the largest companies to also generate the juiciest stock returns — but that bet has paid off handsomely of late.

• Apple is by far the largest holding in Warren Buffett’s portfolio: Berkshire Hathaway bought a $1 billion stake in early 2016 and now owns shares worth more than $110 billion, or more than 40 percent of Berkshire’s portfolio.

• Like Berkshire, nearly 2,000 other large institutional investors have Apple in their top 10 holdings, according to WhaleWisdom.

• Tim Cook’s relatively modest stake in the company he runs recently made him a billionaire. And if Steve Jobs, Apple’s late founder, had kept the 11 percent of the company he held when it went public in 1980 — he dumped all but one share when he was ousted in 1985 — it would be worth nearly $220 billion today.


Today’s DealBook Briefing was written by Andrew Ross Sorkin in New Jersey, Lauren Hirsch in New York, and Michael J. de la Merced and Jason Karaian in London.


Senator Kamala Harris accepted the Democratic vice-presidential nomination. The California senator made history last night as the first woman of color on a major party’s presidential ticket. Former President Barack Obama criticized the Trump administration’s record while defending his own legacy. And Senator Elizabeth Warren, whose speech was seen as a potential audition for a role in a Biden administration, called for universal child care. Tonight, Joe Biden will close out the Democratic convention by accepting the party’s presidential nomination, preceded by speeches from Senator Tammy Duckworth, Mike Bloomberg and others.

Michigan will pay $600 million to victims of the Flint water crisis. The payment is meant to settle claims by tens of thousands of Flint residents that they were poisoned by lead-tainted tap water after officials changed the city’s supply six years ago.

Qantas warned that international flights would be on hold for nearly a year. The Australian airline said that it was “unlikely” to resume transoceanic flights before next July, despite the industry’s efforts to convince travelers that flying is safe.

A Florida appeals court rebuked police tactics in the Robert Kraft case. A three-judge panel affirmed a lower court’s ruling that police improperly gathered the video evidence at the heart of prostitution-solicitation charges against Mr. Kraft, who owns the New England Patriots. Unless prosecutors appeal to Florida’s Supreme Court, the decision essentially ends the case.

President Trump called for a boycott of Goodyear tires. His demand came after an employee posted a photo on social media purportedly detailing company policy against wearing some political attire at work. Goodyear responded that the slide had not come from “Goodyear corporate,” but that it asks employees to refrain from political campaigning at the workplace.

The home rental company ended months of speculation by announcing that it had confidentially filed to go public. It was valued at $31 billion before the pandemic, but its prospects are now much murkier.

Airbnb is aiming for a traditional I.P.O., eschewing the direct listing model that Silicon Valley elders like Benchmark’s Bill Gurley have advocated. (It’s been pitched a merger with a SPAC, too.) The timing of the I.P.O. isn’t clear, though Reuters said the company was aiming to go public by the end of this year.

Why go public now? It seems odd at first, given that Airbnb’s business is so dependent on travel. Since the pandemic, Airbnb has slashed costs, raised emergency funding and laid off a quarter of its staff. But consider:

• The S&P is trading near record highs, driven in large part by technology companies.

• Airbnb’s C.E.O., Brian Chesky, told employees last month its gross bookings have rebounded. (Business travel is an exception.) Expect that to be a big part of the I.P.O. pitch.

• Twelve years after Airbnb’s founding, some early investors are eager to cash out — preferably soon, given the uncertainty of the November elections and the pandemic.

What happens next? Airbnb will have to reassure potential investors about its safety protections, community relations and accusations of discrimination. Would-be backers will also want to learn more about the company’s embrace of stakeholder capitalism, which pledges to serve a larger community rather than just shareholders.

Facebook said it had removed nearly 800 QAnon groups from its site yesterday, and would restrict activity for another 1,950 groups, 440 pages and more than 10,000 Instagram accounts. The viral conspiracy theory’s influence has recently crept into mainstream politics.

Facebook’s announcement comes after intense pressure from major advertisers. Companies from Clorox to Coca-Cola have pushed for more control over the content their ads appear alongside. And as elections approach, disinformation spread on social media sites has been subject to increasing scrutiny. (The specific disinformation in this case? QAnon adherents rally behind false allegations that President Trump is battling a cabal of left-wing, Satan-worshiping pedophiles, among many other things.)

If the day started bad for QAnon, it ended on a higher note, when Mr. Trump offered some encouragement at a news conference called to discuss the coronavirus. “I’ve heard these are people that love our country,” he said. “So I don’t know really anything about it other than they do supposedly like me.”

One part of President Trump’s push for TikTok to sell itself to an American company has caused much head-scratching: his demand for a cut of any deal. The White House’s top economic adviser, Larry Kudlow, has attempted to explain.

Mr. Trump said the U.S. should receive a “very big proportion” of any TikTok sale, likening it to a real-estate transaction in which a tenant pays “key money” to a landlord in exchange for a lease. Legal experts have said there’s no precedent for any such payment, and warned it could undermine the legal integrity of the M.&A. process.

“It’s not something that’s been done in the past,” Mr. Kudlow acknowledged to CNBC yesterday. “But that doesn’t mean it can’t be done now.” That marks a change from earlier this month, when Mr. Kudlow said of the idea, “I’m not sure it’s a specific concept that will be followed through.”

Such a fee would deny China — via ByteDance, TikTok’s Beijing-based owner — some proceeds from a sale, though ByteDance’s investors also include Sequoia, General Atlantic and SoftBank’s Vision Fund. Mr. Kudlow also said that a payment wouldn’t be like an investment banking fee, because “the Department of Treasury isn’t in the investment banking business.” (That said, Treasury Secretary Steven Mnuchin is a former investment banker, and has been involved in discussions with the lead bidder, Microsoft.)

But there may not be any fees for anyone. Mr. Kudlow said that no definite offers from prospective bidders, including Microsoft, Oracle and others, had yet materialized. Under an executive order that Mr. Trump signed last week, TikTok has less than three months to find a buyer or face being banned in the U.S.

China’s new law tightening its control over Hong Kong has had many consequences, including blowback from the Trump administration. It has also had an unforeseen effect on American universities with Chinese students.

There’s reason for concern. Last year, a University of Minnesota student who tweeted criticism of Chinese leaders while he was in the U.S. was sentenced to six months in prison for “provocation” after returning home to China.

Colleges are now adopting measures to shield students from the law, The Wall Street Journal reports:

• Princeton will assign students in a Chinese politics class codes to protect their identities.

• Amherst may introduce anonymous chat rooms to allow for unfettered classroom discussions.

• Harvard Business School may excuse some students from participating in discussions on politically touchy subjects if they fear reprisal from the Chinese authorities.

• Several schools will put warning labels on classes that cover material China considers politically sensitive.

The fears are heightened by remote learning, with school administrators worried that virtual classes could be recorded and monitored by Beijing officials. “There is no way that I can say to my students, ‘You can say whatever you want on the phone call and you are totally free and safe here,’” Meg Rithmire, a professor at Harvard Business School, told The Journal.


• Johnson & Johnson agreed to buy Momenta, a drug maker that specializes in autoimmune disease treatments, for $6.5 billion. (Reuters)

• Corporate stock buybacks fell nearly 50 percent in the second quarter. Meanwhile, companies wrote down $262 billion in the first half of the year, up nearly 200 percent from the same time in 2019. (FT, WSJ)

• Federal and state authorities are reportedly investigating a $300 million fund-raising round by a media company tied to the former White House adviser Steve Bannon and an exiled Chinese businessman, Guo Wengui. (WSJ)

Politics and policy

• JPMorgan Chase is in discussions to provide banking in U.S. post offices. (Capitol Forum)

• The head of the Trump administration’s vaccine initiative criticized biotech companies for inflating their work with the federal government. (Business Insider)


• Palantir, the data-mining consultancy that is preparing to go public, is moving its headquarters to Denver from its hometown in Silicon Valley. (Bloomberg)

Best of the rest

• How we work from home now. (NYT)

• “Can M.B.A. programs build a new generation of antiracist leaders?” (Quartz)

• “Like a Hollywood movie”: How a former D.E.A. flack posed as a C.I.A. spy to swindle millions. (Daily Beast)

Thanks for reading! We’ll see you tomorrow.

We’d love your feedback. Please email thoughts and suggestions to