Will Apple Become A Trillion Dollar Company?
At $623bn Apple is now the most valuable company is history. Is this the beginning of the end or just the start?
- By Gordon Kelly (for TrustedReviews)
- 25 August 2012
On Monday Apple became the most valuable publicly traded company in history. Stocks ended the day up 2.63 percent, roughly $665.15 a share, giving it a market capitalization of $623.52 billion (£393.61bn). With record financials and a new line-up of products on the way for Christmas the question must be asked: can anything stop Apple becoming the first trillion dollar company?
To fully grasp the current situation it is important to first put Apple’s valuation into context. The record Apple broke was that of Microsoft which was valued at $616.34 billion in 1999. Adjust for inflation and today that would be the equivalent to $850-900bn leaving Apple well short. Conduct a history lesson and the gap gets even bigger. In 1720 the South Sea Company hit a dizzying peak value of £3.675bn, equivalent to $73.8 trillion today.
But whether Apple is really number one over the course of history is not the issue – what happened to both its rivals is. Microsoft is today valued at $257.71 billion, a huge reduction (particularly allowing for inflation), while the South Sea Bubble was named after the South Sea Company’s spectacular collapse by 1721. While they fell away for very different reasons (fraud was central to the latter) key to initial concerns was the feeling that both companies had peaked and could only go backwards. With Apple currently worth $200bn more than the world’s second most valuable company, ExxonMobil, similar misgivings would be understandable.
The Case For
And yet Apple makes a remarkable case, not only for being worth its huge price tag, but potentially far more. “It is actually not amazing that Apple is worth $623 billion,” argues Henry Blodget of Business Insider. He points out that stock is trading at 13x earnings, which is widely considered a sensible sum. Furthermore “Apple is delivering on earnings in all major product lines, including the iPhone, iPad and to a lesser extent the Macbook.”
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