Apple Stock: The NEW BIG Short?

Is Apple Stock, or AAPL stock, the NEW BIG SHORT?

Michael Burry, one of the greatest investors of all time, is betting AGAINST Apple stock. You can see his full portfolio update here: LINK

While Michael Burry isn't perfect (LINK), he does have a phenomenal track record. This feats include: 

1. Crushing the S&P 500 as it imploded following the 2000 .com mania. 

2. Making a huge bet against sub-prime mortgages before the Great Financial Crisis,

3. Calling out Cathie Wood, days before her investment ETFs peaked in 2021, as having huge downside risk,

4. Profiting off of GME (before the parabolic short squeeze). 

Given this incredible track-record, when I saw that his largest position by nominal value is short Apple stock via Put options, it got my interest. What does Michael Burry see that might drive Apple stock lower? 

You can see a video discussion on Apple's valuation and business considerations here (what might drive AAPL stock lower): LINK

While Apple has recently performed extremely well, and so far 2022 they're continuing to grow at a great clip (high teens earnings), it's possible Burry see's Apple's potential production challenges, margin pressures as well as a weakening US consumer, as an ASYMETRIC set-up. If Apple's valuation were to regress to where it was a few years ago (low teens) the stock could potentially drop by 30-40%. 

Personally, I don't think Apple stock is the next big short, as they still have an UNRIVALED brand, incredible free cash flows and shareholder friendly capital allocation policies.

That said, at the current valuation, I'm not looking to buy Apple stock either.

Apple seemingly trades at a fair valuation (~25x earnings) assuming that they continue to execute. If there's any blip in execution, sentiment or the economy, it could play out with a much weaker share price. The challenges Apple is facing are short-term in nature and don't yet seem like structural problems. I suspect Michael Burry is short Apple as a "trade" vs. a structural long-term bet. 

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