Apple – Past, Present and Future

Past, present and future of Apple's market cap.

Last month, news outlets began reporting that Apple had overtaken the $700 billion market capitalization mark — something no other U.S. company has ever achieved (at least not on the surface — more on that later).

  • Apple's current market capitalization is higher than Switzerland's and all but 19 other countries in the world.
  • Since the company released the iPhone 6 and iPhone 6 Plus, the market cap has risen 21%.
  • Apple is the first U.S. company to reach a $700 billion market capitalization, as shares traded up to $119.75 last month; although this isn't the full story.
  • iPhone sales are expected to reach 71.5 million in the holiday quarter; Morgan Stanley sees Apple Watch selling 30 million.
  • Adjusted for inflation, Apple has a long way to go to reach IBM's 1967 market cap: $1.3 trillion.

How the Stock Got Here

Apple's stock (AAPL) traded up to $119.75 end of last month, bringing shares up 48% in 2014. $119 might not seem like a high-dollar figure for the world's highest valued stock, but some clarifications will put this into perspective.

The stock debuted in 1980 at $22 per share. After four stocks splits since the IPO (three 2:1s and one 7:1), the adjusted IPO price is about $0.39.

Since this IPO, Apple customers worldwide have taken delivery of Lisa, Macintosh, Apple Newton, Mac, iPod, iPhone, iPad and we are now "twiddling our thumbs" over the Apple Watch.

Through all these products, the stock has delivered an adjusted potential return to shareholders of 30,605% - from IPO to all-time high. Between ROI, stock buybacks and dividends, Apple shareholders are a happy bunch.

Timeline of Apple Products vs Stock Price

Apple's Market Cap, Global Comparison

Apple's market capitalization has doubled since Tim Cook took over in 2011, especially as what appeared to be stalling product shipments have begun to pick back up for the past eight quarters.

Apple first showed up on the Financial Times Global 10 list in 2009 (see their 500 here). In fact, it was number 10. Apple took up permanent residence on the FT Global 10 in Q4 of that year, even as analysts and critics began predicting that Apple would struggle to remain so valuable. Naysayers said the company lacked vision and sales.

2011 was Apple's most active year on the top 10 list, occupying one of the top three spots at any given quarter. Then, in 2012, Apple finally attained the highest market capitalization of any company globally — edging out Microsoft, IBM, Wal-Mart, Exxon Mobil and Petro China. In 2012, Apple's market reached $625 billion.

For twelve straight quarters starting in Q3 2011, Apple has occupied the number one spot on the FT Global 500 list, taking second only twice in that time. In Q4 2011 and Q2 2013, Exxon Mobil snatched the number one spot. Amazingly, Apple's market cap in the ladder quarter was a mere $372 billion.

When AAPL reached $119.75 last month — and Apple surpassed the $700 billion market cap mark—the company was 1.7 times the capitalization of the next biggest company — Exxon Mobil Corp.

Top 5 Market Cap Ranks - 2014

CC0 1.0 Universal (CC0 1.0) Y-Axis represents place on the top 5 list.

Apple's Market Cap, in the U.S.

The hype surrounding Apple's milestone amounts to no other U.S. company ever edging above the $700 billion market capitalization figure. This is indeed a fact.

Apple's fiercest competitor, Microsoft, hit its $600 billion mark in 1999. Exxon Mobil hit its peak around 2008 at just over $500 billion. IBM made a market cap high in 1967 at a (relatively) light $193 billion.

Apple's mark is indeed a modern corporate U.S. milestone. However, when inflation is taken into account, a few other companies have exceeded the $700 billion capitalization mark.

As Benzinga reported, for instance, adjusted for inflation, Microsoft's $600 billion figure jumps to $850 billion. Perhaps the most stunning U.S. market capitalization (when adjusted for inflation) was IBM's in 1967. The actual figure was $193 billion; but adjusted for inflation, IBM's market cap was an incredible $1.3 trillion.

The next milestone for Apple, besides survival, is the $1 trillion mark.

Getting to $1 Trillion?

Apple has a few opportunities on the horizon to attack the $1 trillion market cap; and doubling in three years certainly seems possible for a company growing so aggressively. It would not be surprising to see Apple hit their mark in the next 5 years.

Ming-Chi Kuo, an analyst at KGI Securities (with an excellent track record for producing sales predictions for Apple), imagines the company selling 71.5 million iPhones in Q4 this year. That amounts to an 82% increase in smartphone shipments quart-over-quarter. Maybe they won't reach that figure in Q4, but the company will jump another 10% if it does. It's a wait-and-see situation, but even with these numbers, they will still need a little time to reach $1 trillion.

And what about the Apple Watch? Morgan Stanley sees Apple Watch sales reaching 30 million, which accompanies a MS analysts' price target of $126.

Some have speculated that the largest challenge to Apple reaching the $1 trillion market cap point is its generosity to shareholders. The argument goes: returning so much to shareholders through buybacks and dividends means less cash on-hand to devote to growth.

The problem with this argument is that cash on-hand didn't take Apple to these record levels: great earnings and product sales did. As long as they stay committed to their current path, there is no reason Apple won't continue to set market cap records.

Apple also just released Apple Pay, disrupting commerce; there are also rumors circulating about the iPad Pro. Where people saw Apple's days numbered in 2013, with the stock half of today's value, the company is making an argument that $1 trillion is possible.

There was time when no reputable article could be written without mentioning the iconic co-founder - so, "Steve Jobs", how far they've come.

Leave a Reply