Apple Sells 1 Million Videos

Apple Sells 1 Million Videos Stock Up $3.05 per Share Simply amazing! Apple sells 1 million videos and the stock is up $3.05 right now.

So let’s take a look at the math here. Apple’s download service is new. Who knows how many people downloaded videos just to try them out. But aside from this, let’s assume that of the $1.99 that Apple charges per download that they get to keep half. I’m not sure what the real number is, but let’s assume that it’s half.

If you average out the downloads per day, you get roughly 1,578,947 downloads per month. Now lets assume that Apple continues the momentum of their downloads and in fact each month has a 2% increase in videos sold.

By the end of 12 months under this analysis, Apple would have sold a little over 21 million downloads. Now if Apple gets $1 per download (and I have no idea what the number is) they would make about $21 million from selling downloads. Of course there is incidental cost above and beyond the payment to the content provider, but let’s say Apple cleared $20 million in earnings on their downloads.

So Apple’s stock is up $2.5 BILLION dollars in market cap on what potentially could be $20 million in earnings. This is on top of the fact that the stock today is already at a new 52 week high and trades at almost 40 times earnings with no other major news out on the company today.

Whew! Can somebody say bubble? Forget about what I think about their download technology (it sucks in my opinion — who wants low res versions of tv shows at $2 a pop). Even if I’m wrong and people turn out to love watching low res downloadable tv shows and music videos, there is simply no way, even with stratospheric growth, that today’s run up is justified. Perhaps this is just the beginning and Apple will be making higher quality shows available in the future, etc. etc. And I know they are making decent money off their iTunes and iPod sales, but this is just plain nuts.

It will be interesting to see where these download numbers sit (as well as their stock price) in six months.

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  1. I wanna know who’s actually buying these videos? I can’t believe people are paying to see half-rez videos on a $200 P.O.S.

    Must be nice to be able to blow money away like that.

    I’d rather see Lost in HD on my widescreen for free, then pay $2 for a 320×240 video on a 2 in screen.

  2. Anonymous says:

    It’s all about perception, and the perception is that the iPod video is going to turn video/TV distribution on its head. Yes, The numbers don’t add up (as of yet), but that’s NOW, give Apple another few months to reintroduce archived TV shows,HDTV over firewire, Higher resolution downloads, Etc… As long as Apple can keep the Hype up (which they are brilliant at) They’ll succeed.
    And if the hype doesn’t get the job done, then the extra 2.5 billion cash infusion will certainly help
    The real question for me is what is MS going to do before they lose the battle for the “living room”. This is a MIGHTY big blow and Apple is just getting warmed up.

  3. Anonymous says:

    “How can Apple be going up with products like Front Row and iPod Video when our products, Microsoft Windows XP Media Center Edition 2005, and Portable Media Center, are both better? Just because they have catchy product names!?”

    Sounds like another disgruntled Miscrosoft shareholder!

  4. Because it’s trendy! People are stupid and pay more than they should because ‘it’s cool’ or ‘my friend has one’. They don’t know the other options out there.

    Heck, I remember buy a pair of Air Jordans when I was in 8th grade. I look back now thinking that was dumb. Same thing. It’s just a fad.