“Could Apple become the first company with a $1tn market value? Results this week inspired claims it might, particularly if the new iPhone sells well,” Lex writes for The Financial Times. “Given the puffed-up valuations of other tech companies, it is not the only contender; RBC has predicted Amazon could hit $1tn in the next few years. Measured in real terms, Apple, currently worth $803bn has stiffer competition from ghosts of the past and from one future listing.”
“The future challenger is Saudi Aramco, whose initial public offering is due next year. There is scepticism that the equity value would be as high as the targeted $2tn. But if the IPO proceeds, the kingdom’s oil company should certainly snatch the $1tn crown,” Lex writes. “Neither Apple nor Saudi Aramco would quite be the first internationally. PetroChina reached $1tn in nominal terms on the first day of trading after its 2007 listing — though never again.”
“And a frequent flaw of market worth applies: Apple’s is distorted by a net cash balance of more than $150bn,” Lex writes. “That means an enterprise value of $1tn is still a very long way off.”
Read more in the full article here.
MacDailyNews Take: We’ve been hearing about Apple achieving a $1 trillion market cap for over six years now, but, this time around, if everything goes well (“iPhone 8”) it just might be attainable.
SEE ALSO:
Why Apple’s market cap is going to $2 trillion – August 2, 2017
Analyst: Apple to become world’s first trillion dollar company within 12 months – July 7, 2017
How Apple’s market value gets to $1 trillion – May 23, 2017
Gene Munster: Why Apple deserves an historic trillion-dollar valuation – May 22, 2017
Analyst sees Apple’s market value at $1 trillion in a year – May 8, 2017
Apple’s path to first-ever $1 trillion market cap – March 7, 2017
Apple on track to become first ever $1 trillion company – February 17, 2017
Bernstein: Apple could be first to $1 trillion market value, propelled by services revenue – Cramer agrees – May 18, 2016
Apple would be worth $1 trillion if market valued it like Steve Jobs-run company – January 4, 2016
Analyst: How Apple’s market value hits $1 trillion in 2016 – November 10, 2015
Annual iPhone Upgrade Program could power Apple to become world’s first $1 trillion company – September 16, 2015
Analyst: Apple at $1 trillion in a year – May 11, 2015
Dream of $1 trillion valuation for Apple slips away – April 17, 2015
Second analyst sees Apple worth $1 trillion – April 17, 2015
Here’s how Apple gets to $1 trillion valuation in just 12 months – March 23, 2015
Apple eyes trillion-dollar market cap – February 24, 2015
Apple’s stock swoon just a blip on its way to being worth $1 trillion – December 2, 2014
Trillion-dollar baby: Can Apple go where company has gone before? – November 24, 2014
Is Apple about to be the first $1 trillion company? Carl Icahn says yes – November 18, 2014
Omega’s Einhorn: Apple’s market value could hit $1 trillion – November 18, 2014
Apple’s market value primed to go to $1 trillion, creating largest company in history – July 3, 2012
Apple at $1,111 per share with a $1 trillion market cap in the next year – April 26, 2012
Piper Jaffray ups Apple price target to $910; sees world’s first trillion-dollar market cap – April 3, 2012
How Apple can reach $2 trillion market value in 2016 – March 16, 2012
Apple: $1 trillion market cap inevitable? – February 21, 2012
Could Apple become world’s first trillion-dollar company? – January 28, 2012
Altucher: Apple will become a trillion-dollar company; $1,000 a share – May 3, 2011
Apple could become first $1 trillion company in as little as 36 months – April 14, 2011
I will believe it, when I really see it happened. Other than that it just rumor is ad rumor does. Who would believe rumor?. I don’t.
$156.50 is not all that far away from $193.43.
Certainly possible. Apple survived its weakest quarter with gains in all areas
They would need to do the same next quarter and get to $175 by then.
Finally iphone8 launch needs to be on time with god amount of stock over the xmas quarter.
Then maybe Apple may get to 1t.
Don’t forget share buyback will reduce the market cap so the final stock price may need to be $200.
Not necessarily true. Assuming earnings remain unchanged a share buyback should have the effect of increasing share value.
“And a frequent flaw of market worth applies: Apple’s is distorted by a net cash balance of more than $150bn,” Lex writes. “That means an enterprise value of $1tn is still a very long way off.”
Could someone explain this, please (the article is behind a pay wall). It seems exactly backwards to me.
Market cap is the value of the whole company.
Enterprise value, subtracts net cash, from market cap. In theory, it’s the value of the operating business. The reason why you look at EV, is presumably if you buy the company, you are also buying the cash, so, in theory, the cash cancels out. Way back in 2003, my brother called and asked me what I thought of buying Apple, since the price at the time was only $12 a share. I told him Apple had $10 a share in cash, at the time, so the EV was only $2!
Now, what FT wrote is true in theory, but the market tends to discount the value of cash for a number of reasons. One, the cash may be before tax, while almost all the other numbers on your balance sheet are after tax. So factor out taxes. Two, the market may believe that cash could be wasted on silly purchases, like when Microsoft bought Nokia. That was $8B wasted. There are plenty of similar examples. In Apple’s case, it does seem like the market has heavily discounted the value of Apple’s cash. Why? I don’t know, since Apple rarely makes large wasteful purchases. Beats is the only one that I know of that exceeded $1B. Apple’s cash seems more of an anchor than a positive. Probably because the market doesn’t seem to understand Apple’s cash. Like, they don’t realize Apple has already booked US tax on over half of it.
The more you look at the market, the more you come to the realization that most participants haven’t read the financial statements, 10K or 10Q.
good reply