Apple makes history as first public company to hit $3 trillion capitalisation
Apple’s market capitalisation hit $3 trillion during the trading day on Jan. 3. It thus became the first public company to reach that level of capitalisation. Apple has raced to a $3 trillion market value from $1 trillion in just 41 months. The company’s stock-market valuation topped $1 trillion in August 2018 and $2 trillion in August 2020.
The iPhone maker is the first public company that has ever been as big as to account for 7% of the S&P 500 Index. Apple pulled ahead of its closest rival, Microsoft which caught up a few months ago. Other close public companies are Google owner, Alphabet, which like oil behemoth, Saudi Aramco and e-commerce pacesetter Amazon.com are either at $2 trillion or less than $2 trillion.
Despite that surge and significant risks, the technology giant run by Tim Cook can continue to evade the law of large numbers.
Apple’s revenue, $366 billion in the most recent fiscal year, is in the same ballpark as the GDP of Israel or Hong Kong. The company returned nearly $200 billion to investors through share buybacks and dividends last year, more than the entire market value of any but the top 40 or so groups in the S&P 500.
For more than a decade leading up to 2019, the company’s shares typically traded at a price-to-earnings ratio discount to the broader market. That’s no longer the case, but today’s stock price doesn’t look badly overstretched. At roughly 30 times earnings, it’s only a little richer than the S&P 500 overall. An enterprise value of about 8 times revenue makes Apple cheaper than, say, Microsoft. Adjusting for one year’s forecast growth, per Refinitiv, provides the only hint that Cook has his work cut out: A higher price-earnings-to-growth or PEG ratio suggests more demanding expectations for Apple than for most other tech giants.
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