Published: Fri, August 03, 2018
Markets | By Erika Turner

Apple becomes world's first trillion-dollar company

Apple becomes world's first trillion-dollar company

The market cap is the company's total market value, calculated by multiplying the value of its stock times all shares outstanding.

United States Steel Corp plummeted 10.3 per cent after the company's forecasts fell below some analyst expectations in light of higher steel prices.

Apple is in the unique situation of controlling the hardware and software in its mobile devices, with content for users required to go through its App Store that takes a percentage of revenue.

"The combination of a strong macro environment and an increasingly engaged customer base led to double-digit growth in all regions", Morgan Stanley said in a note, according to CNBC.

Apple has won the race to a $1 trillion valuation ahead of its so-called FAANG rivals (Facebook, Amazon, Netflix, Google).

More recently, Apple has been in a race to $1 trillion with Seattle-based e-commerce giant Amazon, which is now valued around $879 billion.

The iPhone maker achieved that big number on Thursday when the stock passed $207.04 a share. "This is not the end, that they hit $1 trillion".

Investors most likely won't care as long as Apple keeps growing and as long as it continues to churn out eye-popping earnings on an absolute basis.

Turns out that trading things like lumber and maple syrup is just slightly more valuable than selling iPhones.

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Because of its size and value, the health of Apple ripples through the US economy and its markets. So who's going to pay for it?

Digging the information further, Apple technically is not the first company to hit $ 1 trillion mark in the U.S. stock market. On a percentage basis, that was far lower than other USA technology companies. In fact, while the company's iPhone earnings for the quarter grew 20% year-over-year because of higher smartphone ASPs, Apple's services revenue grew 31% year-over-year as the company has been expanding its offerings for some time now.

What makes it impressive is that Apple buys back a lot of its stock. "Some companies are priced by the market on hopes and dreams of future profits". That put Apple on a path to overtake Exxon Mobil in 2011 as the largest USA company by market value.

Ivan Feinseth, chief investment officer at Tigress Financial Partners, sums up its success this way: "One word: iPhone".

"They get the blue ribbon", said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

Before the release of the iPhone, Apple was reporting revenue of less than $20bn and profits of less than $2bn from the sale of its Mac personal computers in 2006.

"The markets are starting to recognize the value of its platform and services more and more, and that's what is being reflected in the increase in market capitalization", said Brad Neuman, Director of Market Strategy at Alger, a growth equity asset management firm in New York City. By 2010, its value was almost $300 billion.

As the stock market has climbed up and up this year, technology companies have propelled the gains.

A few days ago, it was announced that Apple was nearing the trillion dollar mark in terms of their market value.

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