Apple: First trillion dollar baby?

“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.

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Analyst: How Apple’s market value hits $1 trillion in 2016 – November 10, 2015
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Analyst: Apple at $1 trillion in a year – May 11, 2015
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How Apple can reach $2 trillion market value in 2016 – March 16, 2012
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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


  1. 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.

  2. “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.

    1. 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.

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