Walmart, Disney, Netflix, Nike, Exxon Mobil, Coca-Cola, Comcast, Morgan Stanley, McDonald’s, AT&T, Goldman Sachs, Boeing, IBM, and Ford are all part of a conglomerate that includes the following companies:
Apple, the computer business that began in a garage in Cupertino, California, in 1976, is now valued at $3 trillion. In the early hours of Monday, when its shares temporarily exceeded $182.86 a share before settling at $182.01, it became the first publicly listed business to ever achieve the milestone.
Apple’s valuation is even more impressive when you consider how quickly the company has risen in recent years. Apple became the first American corporation to ever have a market capitalization of $1 trillion in August 2018, a feat that took 42 years to accomplish. Two years later, it surpassed $2 trillion in value. It only took 16 months and 15 days to reach its next trillion-dollar milestone.
It would have been unthinkable a few years ago to place such a high value on anything. Now, it looks to be just another milestone for a corporate behemoth that is continuously expanding and appears to be facing just a few significant roadblocks along the way. Microsoft, another technology behemoth, might join Apple in joining the $3 trillion club as early as this year.
“When we first began, we had high hopes that it would be a prosperous firm that would last for generations. But it’s not something you anticipate,” Steve Wozniak, the engineer who co-founded Apple with Steve Jobs in 1976, said.
It is remarkable that a $3 trillion value has been placed on the company. It is worth more than the total value of all of the world’s cryptocurrencies combined, according to Bloomberg. It is about equivalent to the gross domestic output of either the United Kingdom or the Republic of India. Furthermore, it is the equivalent of around six JPMorgan Chases, the largest American bank, or thirty General Electrics.
According to Howard Silverblatt, an analyst at S&P Dow Jones Indices who studies stock values, Apple now accounts for about 7 percent of the entire value of the S&P 500, shattering IBM’s previous record of 6.4 percent set in 1984, according to the S&P 500. According to him, the value of Apple alone accounts for around 3.3 percent of the total value of all worldwide stock markets.
Apple’s meteoric rise may be attributed to many factors, including its tight grasp on customers, an economy that has benefitted its company and stock in particular, and its clever use of a large amount of cash.
When Apple announced the iPhone in January 2007, the business had a market capitalization of $73.4 billion. After fifteen years, the iPhone, which was already one of the most successful devices in history, has continued to expand at an incredible rate. iPhone sales reached $192 billion in the fiscal year that ended in September, representing an increase of over 40% over the previous year.
As a result of the epidemic, sales of other Apple products skyrocketed, as people utilised them more for work, education, and socialising. The pandemic also prompted investors to flock to the safety of Apple’s stock in an increasingly uncertain global economic environment.
Apple’s massive sales and high profit margins have resulted in a cash reserve large enough to enable it to purchase a firm like UPS, Starbucks, or Morgan Stanley altogether for a little premium. Apple had $190 billion in cash and investments at the end of September, according to company reports.
However, rather of making a significant purchase or even attempting anything as grandiose and costly as creating numerous facilities in the United States, Apple has opted to return a substantial portion of its wealth to its investors by purchasing its own shares in large quantities.
According to an estimate by Mr. Silverblatt, during the last decade, Apple has acquired $488 billion worth of its own stock, by and away the most amount of any corporation in history. Apple spent a lot of money when it took advantage of a tax law change in 2017 to repatriate the majority of the $252 billion it had stashed away in foreign accounts. Mr. Silverblatt said that Apple is now responsible for 14 of the 15 greatest stock buybacks in a single financial quarter, up from just one in the previous quarter.
Apple has spent more than $82 billion on research and development over the last five years, increasing its investment year after year, according to a company spokeswoman. The firm employs around 154,000 people, which is 38,000 more than it did five years ago, the spokesperson said.
Stock buybacks have the effect of reducing the total number of shares available for purchase. This increases the value of each remaining share while also improving the underlying fundamentals of the firm in the formulae that institutional investors and automated trading algorithms use to choose companies to invest in. As a consequence, the stock price rises in the short term.
According to Mr. Lazonick, a $3 trillion value is the consequence of a number of different elements coming together. There is no way to tell how much of it is guesswork, how much is manipulation, and how much is invention, according to him.