Apple becomes trillion-dollar company once again
After a month of gains, and one day after Apple's September event, Wall Street has responded by raising the share price for the company to a level that gives it a market capitalization valuation that exceeds 1 trillion dollars once again.
On Wednesday, Wall Street responded to the event and positive news surrounding pricing by analysts with a flurry of trading, starting from an opening price of $218.07 and continuing gains on the day. At about noon eastern time, AAPL shot past $221.16, the share price it needed to beat to reach a market capitalization of $1 trillion dollars based on its basic share count, making the iPhone maker a trillion-dollar company once more.
This is not the first time Apple has reached the heady trillion-dollar heights. In August 2018, it became the first US company in history to reach the milestone, then after reaching a high of $232.07 in October, dropped down considerably in January following a warning Apple would miss its December-quarter guidance by billions of dollars.
This is also not the first time in 2019 that Apple has hit a trillion dollars. In May, a share peak allowed Apple to hit the barrier once more, again following a strong quarterly earnings report.
On Wednesday, Wall Street responded to the event and positive news surrounding pricing by analysts with a flurry of trading, starting from an opening price of $218.07 and continuing gains on the day. At about noon eastern time, AAPL shot past $221.16, the share price it needed to beat to reach a market capitalization of $1 trillion dollars based on its basic share count, making the iPhone maker a trillion-dollar company once more.
This is not the first time Apple has reached the heady trillion-dollar heights. In August 2018, it became the first US company in history to reach the milestone, then after reaching a high of $232.07 in October, dropped down considerably in January following a warning Apple would miss its December-quarter guidance by billions of dollars.
This is also not the first time in 2019 that Apple has hit a trillion dollars. In May, a share peak allowed Apple to hit the barrier once more, again following a strong quarterly earnings report.
Comments
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If it was, we'd say so. Microsoft at the very least has a higher valuation.
Update: Apple’s Stocks app and other sources now all report AAPL closing with a market cap of $1.01T. Looks like agreement has been reached.
“4,519,180,000 shares of common stock were issued and outstanding as of July 19, 2019.”
Clearly, they have LESS shares outstanding than this now, but using that figure, to get to a $1 T market capitalization, they’d have to have a stock price of (1T/4.519180M=) $221.28/share.
So by that measure, Apple is indeed in the Trillion Dollar Club again.
Addendum: The less shares Apple has outstanding, the higher the cost per share has to be to reach the 1 T mark. That’s where”valuation” gets interesting. Is Apple only as truly “valuable” as it was a year ago? I would argue that it’s decidedly more valuable....
Addendum #2: The issue of value is very much in the eyes of the beholder. I’d argue that net cash is “dead value” to most of the market (hence the sky-high valuations for companies like Amazon, Netfix, etcetera). Value is more placed on growth potential, IMHO. By that measure, Apple is clearly still growing handily (years after that was supposed to be impossible), and stock buybacks, which convert “dead” cash into an increased percentage ownership for remaining shares, are thus seen as a legitimate means of increasing stock value for a still-growing company (by increasing earnings and revenue per share).
Of course, if you exercised good parenting skills and used the “parental control” function, you’d have already kept your kids from subscribing to things in the first place.
Barring that, you can go to the “manage subscriptions” page and cancel all of them all at once, no questions asked. That’s one of the benefits of subscribing to content through Apple. You can go right to it and take care of business, and there’s no sales pitch or bargaining to try to change your mind and keep you signed up. This is one one of those features that content providers (Spotify, anyone?) who resent giving Apple a its “cut” don’t realize is actually a means for generating subscribers. For many, the ease of canceling a subscription lowers inhibitions to starting a subscription.
The current market price just indicates the current equilibrium between the buyers who are willing to pay the most and the shareholders willing to sell for the least. There are millions of AAPL shareholders (and hundreds of major institutional investors who own the bulk of AAPL stock). Only a few of them are willing to sell their shares for the current price (which is why it's the current price). Everyone else values their AAPL shares higher. Therefore if the current market cap for Apple were exactly $1 trillion, even if you had a trillion dollars in cash and could somehow contact every holder of AAPL shares simultaneously, the vast majority of those potential sellers would tell you to buzz off. Therefore, logically Apple is valued by the market at well over a billion dollars. (Obviously this isn't unique to Apple; it's just an observation about what "market cap" means--and doesn't mean).
If you’d said “valuation” rather than “market [valuation]”, I would have agreed with you. But the market’s valuation/capitalization, while also a moving target like Apple’s share count, is literally defined by price per share times share count.
It helps to keep our terms clear. And note that nothing says that market cap equals a meaningful estimate of a company’s value, either at a specific moment or as a potential.
Which, as a long term AAPL owner, has been my beef with the market. Since the Great Recession, the market has drastically underestimated both Apple’s potential for continued growth and the value of it’s cash flow. It’s less the case now, but it took better than a decade to see that begin. And that’s one part of why Apple buying back huge amounts of AAPL at fire sale prices was both a no-brainer and a genius move.
Bottom line though? Apple has made many of its investors wealthy regardless of the negativity spewed by you and others know-nothings.
The bottom line is there is NO PREDICTING any stock valuation over the long term. And today’s market is more of a casino than most times in the past. Is MSFT a momentum stock? Maybe. If so, it can quickly move in either direction.
AAPL, OTOH, is clearly not a momentum stock. It’s literally earned at a minimum it’s present Price/Earnings (per share) ratio. Indeed, but for the Trump Tariff War, AAPL would be far above even it’s present price. And someday that War will end.