The total value of Apple stock passed $1.5 trillion in trading on the NASDAQ Wednesday, smack in the middle of a global pandemic that’s affecting all of the company’s major markets.
Apple is the first U.S. company to exceed $1.5 trillion in value. (Saudi Aramco is the only other company that has crossed this milestone; it was worth $2 trillion after its first day of trading post-IPO.)
The company’s stock was trading at around $352 per share at the time its market cap exceeded $1.5 trillion. The stock hit a low of $229 back in March as the pandemic set in, but investor confidence in the company’s post-coronavirus prospects grew steadily during April and May, then pitched sharply upward this week.
Some analysts believe investors may be feeling good about the revenue possibilities in Apple’s first 5G phone, which should be arriving later this year. They may also be optimistic about the Apple Watch, which, like Apple’s services business, seems well on its way to being a major revenue contributor as the iPhone business continues to level off. Apple doesn’t break out Watch sales, but Strategy Analytics believes the company sold 7.6 million smartwatches worldwide in the first quarter of 2020, up 23% from the 6.2 million it sold in the same quarter last year.
Creative Strategies analyst Ben Bajarin argues that Apple’s strong stock price may reveal more about its investors than its products. He believes Apple’s stock value has sometimes been underestimated because the formulas used by institutional investors to evaluate consumer tech companies just don’t work with Apple.
“One of the key arguments the short-sellers had with Apple was their customers would eventually leave to find something cheaper,” Bajarin writes in a research note today.
“Apple’s products were treated like commodity consumer electronics, and the template they were using [was one for] traditional consumer electronics products that don’t typically see high degrees of customer loyalty,” Bajarin writes. “Apple’s brand was certainly something that was factored in, but that did not seem to have as much weight as it should have either, in my opinion.”
Apple is once again the biggest company in the US stock market
AAPL $1.53 trillion
MSFT $1.49 trillion
AMZN $1.32 trillion
GOOG $1.00 trillion
FB $679 billion pic.twitter.com/hv4uTNpMub
— Ben Carlson (@awealthofcs) June 10, 2020
While the title of “most valuable tech company” often switches hands between Microsoft, Apple, and Amazon, Apple beat the other Big Tech companies to the $1.5 trillion line. It’s likely the others will follow as technology continues to transform markets and industries.
Meanwhile, competitive threats to the businesses of the Big Five tech companies—Apple, Google, Amazon, Microsoft, and Facebook—seem limited and manageable. As some have argued, we may well have entered an era where a few massive tech companies are unassailable, and where smaller innovators battle for what’s left or get swallowed up by the bigger fish.