Apple becomes the first company to reach a market value of $ 3 trillion
It combines Walmart, Disney, Netflix, Nike, Exxon Mobil, Coca-Cola, Comcast, Morgan Stanley, McDonald’s, AT&T, Goldman Sachs, Boeing, IBM and Ford.
Apple is still worth more
Apple, the computer company that started out of a California garage in 1976, is now worth $ 3 billion. It became the first publicly traded company to hit the figure on Monday, when its shares briefly eclipsed $ 182.86 a share before closing at $ 182.01.
Apple’s value is even more remarkable considering how fast its recent rise has been. In August 2018, Apple became the first American company to be worth $ 1 trillion, an achievement that took 42 years. It passed $ 2 trillion two years later. His next billion took just 16 months and 15 days.
Such an assessment would have been unfathomable a few years ago. Now it seems like another milestone for a corporate titan who is still growing and seems to have few obstacles in his way. Another tech giant, Microsoft, could follow Apple into the $ 3 trillion club earlier this year.
“When we started, we thought it would be a successful company that would last forever. But you don’t really imagine this, “said Steve Wozniak, an engineer who founded Apple with Steve Jobs in 1976.” At the time, the amount of memory a song could hold was $ 1 million.
Apple’s market valuation has risen rapidly in recent years, driven by surging sales of the iPhone and other devices during the pandemic.
From any point of view, a valuation of $ 3 trillion is surprising. It is worth more than the value of all the cryptocurrencies in the world. It is roughly equal to the gross domestic product of Great Britain or India. And it’s equivalent to roughly six JPMorgan Chases, the largest US bank, or 30 General Electrics.
Apple now accounts for nearly 7% of the total value of the S&P 500, breaking IBM’s record of 6.4% in 1984, according to Howard Silverblatt, an analyst who tracks valuations at the S&P Dow Jones Indices. Apple alone represents about 3.3% of the value of all world stock markets, he said.
Behind Apple’s rise is its strong grip on consumers, an economy that has especially favored its business and stocks, and its cunning use of a massive amount of cash.
When Apple introduced the iPhone in January 2007, the company was worth $ 73.4 billion. Fifteen years later, the iPhone, already one of the best-selling products in history, continues to experience impressive growth. In the year ending in September, iPhone sales were $ 192 billion, almost 40% more than the previous year.
The pandemic also skyrocketed sales of other Apple devices as people used them more for work, study and socializing, sending investors fleeing to the safety of Apple stocks in an increasingly uncertain global economy.
Apple’s huge sales and wide profit margins have provided it with a cash reserve large enough to buy a company like UPS, Starbucks or Morgan Stanley outright. At the end of September, Apple reported $ 190 billion in cash and investments.
“They have created the largest ATM in history,” said Aswath Damodaran, a New York University finance professor who studied Apple.
However, rather than make a major acquisition, or even attempt something ambitious and expensive, like building several factories in the United States, Apple has decided to largely return its cash to its investors by buying its own shares.
Over the past decade, Apple has bought $ 488 billion of its own stock, by far the most of any company, according to an analysis by Silverblatt. Much of that spending came after Apple used a 2017 tax law to move most of the $ 252 billion it had withheld abroad to the United States. Apple is now responsible for 14 of the 15 largest share buybacks in a single financial quarter, Silverblatt said. “They’re the poster boy,” he said.
An Apple spokesperson noted that Apple has spent more than $ 82 billion on research and development over the past five years, steadily increasing its investment each year, and that it employs about 154,000 people, or 38,000 more than five years ago.
Apple is also the largest contributor in the United States. In April, the company said it had paid $ 45 billion in taxes over the previous five years.
Economists are divided on buybacks. Some economists say that companies with excess cash should return the money to their shareholders, which is much better for the economy than sitting with billions of dollars in cash, they say.