Catch me up: Apple, a trillion-dollar company
August 2018 – Apple became the first public company to be valued at $1 Trillion
That’s unique: Sum of all publicly-traded US companies hit $30 trillion total that same year.
What does a trillion-dollar valuation really mean?
Reminder: Company valuations are basically the Measurable Value they’re delivering, multiplied by an arbitrary Confidence Factor decided by the market.
So let’s break down Apple’s:
How does this all translate into a stock?
A stock is just a slice of the big value pie: valuation divided by the number of shares
Total Valuation = (Measurable Value) x (Confidence Factor)
Apple net profits are in the $55B range, and the company’s market valuation is around $1.2 trillion. So that confidence factor is somewhere in the 22x range.
No one knows exactly what that means, because it’s all relative.
HP is around 9x, Amazon is around 70x, and Google is somewhere around 25x.
The Measurable Value data, like revenue/expenses/profit/sales, is released quarterly in public announcements.
The Factor is what moves with the news and people’s opinions of it.
As you read, think about how the news would affect your Confidence factor for Apple. Do you think this piece of new information is going to make Apple more of less valuable in the future?
Bottom line: Do you think Apple is going to be more or less valuable 5-10 years from now? If so, grab a share. If not, let it lie.
For the history buffs:
1976 – Apple founded by Steve Jobs and Steve Wozniak
1985 – Apple launched its first Macintosh computer, and kicked Steve Jobs out.
1997 – After a tough decade of flops and interim CEO’s, Apple purchased Steve Jobs’ Next Computers for $429 million to bring him back to lead. Apple valuation around $2.5 billion.
2001 – Apple introduced the iMac and Mac Operating System, and launched the iPod. iPod was dominant and important to Apple’s revenue. By 2005, it was 76% of portable music device market, and almost doubled the revenue from $1.9B to $3.2B in one year.
2003 – Apple launched iTunes Music Store. By 2010 they would celebrate 10 billion song downloads.
2005 – Apple announced transition to Intel processing, begins period of massive growth. $30B valuation.
2007 – Apple unveils the iPhone and iOS. $150B valuation.
2010 – iPad released to the public. $300B valuation.
2011 – Tim Cook takes over from Steve Jobs. $350B valuation.
2014 – Apple unveils the Apple Watch, buys Beats for $1B. $600B valuation
2017 – iPhone 8 released. $800B valuation.
2018 – Apple crosses $1 trillion valuation.