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Combine Walmart, Disney, Netflix, Nike, Exxon Mobil, Coca-Cola, Comcast, Morgan Stanley, McDonald’s, AT&T, Goldman Sachs, Boeing, IBM and Ford.
Apple is still worth more.
Computer company Apple, which started in a California garage in 1976, is now worth $3 trillion. It became the first publicly traded company to reach that figure on Monday.
Apple’s value even more remarkable considering how fast his recent rise was. In August 2018, Apple first american company It’s worth $1 trillion, a feat that lasted 42 years. he over $2 trillion two years later. The next trillion took just 16 months and 15 days.
Such a valuation would have been incomprehensible a few years ago. Now it looks like another milestone for a corporate titan. still growing and there seems to be a few long hurdles in its path. Another tech giant, Microsoft, could follow Apple to the $3 trillion club earlier this year.
“When we started we thought it would be a successful company that would go on forever. “But you don’t really envision it,” said engineer Steve Wozniak, who co-founded Apple with Steve Jobs in 1976. “Back then, the amount of memory to hold a song cost $1 million.”
By almost every measure, a $3 trillion valuation is striking. It is worth more than the value of all cryptocurrencies in the world. It is roughly equivalent to the gross domestic product of the UK or India. And that’s the equivalent of about six JPMorgan Chase, the largest American bank, or 30 General Electrics.
According to Howard Silverblatt, an analyst who tracks valuations on the S&P Dow Jones Indices, Apple currently accounts for about 7 percent of the S&P 500’s total value, beating IBM’s record of 6.4 percent in 1984. Apple alone said it accounts for about 3.3 percent of the value of all global stock markets.
Behind Apple’s rise are its tight control over consumers, an economy that favors its business and its stocks, and its cunning use of an enormous pile of cash.
When Apple launched the iPhone in January 2007, the company was valued at $73.4 billion. Fifteen years later, the iPhone, already one of the best-selling products in history, continues to record impressive growth. In the year ended September, iPhone sales were $192 billion, up almost 40 percent from the previous year.
The pandemic has also boosted sales of other Apple devices as people use them to work, read and socialize more, prompting investors to flee to the safety of Apple stock in an increasingly uncertain global economy.
Apple’s massive sales and large profit margins have given Apple enough cash to buy outright a company like UPS, Starbucks or Morgan Stanley. At the end of September, Apple reported $190 billion in cash and investments.
“They created the biggest cash machine in history,” said Aswath Damodaran, an Apple-trained finance professor at New York University.
Still, instead of trying something ambitious and expensive like making a major acquisition or building multiple factories in the United States, Apple has decided to give its investors back a lot of its cash by buying its own stock.
According to an analysis by Mr. Silverblatt, Apple has bought its own shares for $488 billion in the past decade. Most of these expenses It came after Apple used the 2017 tax law to carry most kept $252 billion abroad Return to the United States. Mr Silverblatt said Apple is currently responsible for 14 of the 15 biggest stock buybacks in any fiscal quarter. “They are the poster child,” he said.
An Apple spokesperson pointed out that Apple has spent more than $82 billion on research and development over the past five years, steadily increasing its investment each year, and employing about 154,000, or 38,000, more than five years ago.
Economists are divided on buybacks. Some economists say companies with excess cash should return the money to their shareholders. They say it’s much better for the economy than sitting on billions of dollars in cash.
“This whole idea that the buybacks somehow went into a black hole is surprising,” said Mr. Damodaran. “This is the cash going to the investors.”
Other economists say buybacks are largely designed to increase a company’s value, and money should instead be used to invest in business, raise wages or even lower prices.
Apple, for example, has spent billions of dollars buying its own stock while using low-wage workers to assemble its products, working hard to avoid taxes and tariffs, and constantly raising the prices on its devices.
“Apple could have gone and used that money for all sorts of things. Instead, they use it to boost stock prices,” says William Lazonick, emeritus professor of economics at the University of Massachusetts and a leading critic of buybacks since the 1980s.
Mr. Lazonick said buybacks increase stock prices by encouraging investors to buy, and then cause momentum in the stock market as other investors try to cash in on the increase.
Share repurchases reduce the total number of shares that can be purchased. This makes each remaining share worth more and improves the fundamentals of the company in the equations that large investors and automated trading systems use to buy stocks. As a result, the stock price rises.
According to Mr. Lazonick, a $3 trillion valuation is the result of a mix of factors. “It’s impossible to know how much of it is speculation, how much is manipulation, how much is innovation,” he said.
Kellen Browning’s photo. contributing reporting.
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