World’s Most Valuable Public Company – Apple’s Road to $2 Trillion Market Cap

• Successful product categories
• Two-digit billion profits
• High demand for Apple shares

¬ In times when a large number of companies are struggling with the serious consequences of the COVID-19 pandemic, the figures provided by the Californian group for the second quarter of 2022 are highly remarkable. Last year, Apple became the second company ever to achieve a market capitalization of at least USD 2 trillion, behind the Saudi oil company Saudi Aramco.

From the garage to the stock exchange

The story began on April 1, 1976, when Steve Jobs, Steve Wozniak and Ronald Wayne (who left Apple shortly thereafter) founded Apple and assembled the first computers in Steve Jobs’ parents’ garage. A little over four years later, on December 12, 1980, the company went public at a purchase price of $22 per share.

In 1996, Apple was on the brink of collapse. An annual loss of one billion US dollars was recorded, the share price fell from 70 to 14 US dollars and with the introduction of “Windows 95” the company was almost completely pushed out of the market by its rival Microsoft. With Steve Jobs as managing director and innovations such as the iPod or iTunes, however, the company catapulted itself out of the misery and back into the black.

Best Seller iPhone

A true milestone for the group followed in 2007. In a keynote speech that is still considered legendary today, Steve Jobs presented the very first iPhone and thereby revolutionized the entire mobile phone market. To date, the iPhone has sold over 1.6 billion units, generating over $1 trillion in revenue.

In 2010, Apple introduced the touchscreen computer iPad to the world. As Der Spiegel reported, due to the sales boom in the USA, even the launch outside of the USA had to be postponed, since even Apple had underestimated the initial success. Other innovations followed, such as the AppleWatch or the AirPods, with which Apple has successfully dominated many other markets to this day.

In 2007, the year the iPhone was introduced, Apple’s turnover was around 24 billion US dollars. Ten years later, in 2017, sales had increased almost tenfold to over $229 billion. A profit of 48.35 billion US dollars was on the balance sheet in the same year.

Apple valuation at $1,000,000,000.00

It has consistently generated more than $200 billion in revenue since 2015, when Apple’s revenue jumped from $182.8 billion the previous year to a whopping $233.7 billion. In 2018, Apple’s strongest year in terms of sales to date, with 265.6 billion US dollars, the group was also able to record a record profit of 59.5 billion US dollars. As a result, Apple became the first US company in financial history to be given a thirteen-digit group valuation of over one trillion US dollars in August 2018.

Now, almost three years later, the $2 trillion barrier has been breached. But in September 2019 Apple was still about as far away from that as in August 2018, because there was stagnation in the group valuation during the period. Basically, Apple didn’t make the climb to $2 trillion from August 2018 to now, but rather from September 2019 to now.

From $1 trillion to $2 trillion

This begs the question of how Apple was able to become a whole trillion dollars more valuable in just over 11 months. As Daniel Martins points out at AppleMaven, no single cause is likely to have led to this gigantic increase in value. This is more likely to be due to several factors at the same time.

On the one hand, Apple’s service segment is subject to much stronger growth rates than Apple’s management originally aimed for. According to Daniel Martins, the service division contributes to the higher company valuation through more lucrative margins and more reliable forecasts of sales. On the other hand, Apple’s so-called “wearables”, especially the Apple Watch and the new AirPods, were very successful and were able to develop a dominant position in their markets. In addition, the technological change towards 5G is likely to have played Apple’s cards with its 5G-supporting devices, which analysts and investors in particular were pleased about.

And finally, Apple shares have been in high demand in recent months, as shown by the enormous price rally of the past few months. Warren Buffet’s Berkshire Hathaway in particular was very interested in the coveted securities from California. Apple’s share of the overall portfolio was gradually increased. In February 2020, Warren Buffett himself called Apple “the best company in the world.” As of the end of the fourth quarter of 2021, Warren Buffett’s investment firm held around $157.5 billion in Apple stock, which may have further supported a higher valuation.

Apple shows strength in times of pandemic

So far there is no sign of a COVID-19 crisis at the Californian tech giant. The company valuation of over 2 trillion US dollars is accompanied by quite successful key figures for the past second quarter of 2020. As mentioned earlier, Apple’s revenue increased 11 percent to $59.7 billion, a best for the quarter ended June, and profit increased 12 percent to $11.25 billion for the same period be raised. Figures and developments that stand out positively in times of crisis.

Philipp Beißwanger / Editor finanzen.net

Image sources: Vividrange / Shutterstock.com, apple