There are good weeks, and there are good weeks. Before yesterday (Aug. 2), Apple was already having a pretty good week: Earnings came in strong, buoyed by big successes with services and subscriptions, and investors were mostly happy with what they saw.
What tipped the week from good to sizzling was what happened on the stock market — when Apple’s market cap tipped over the $1 trillion mark, making it the first U.S.-listed public company for which that has ever happened, though not quite the first trillion-dollar firm in history.
Technically, oil giant PetroChina briefly topped a trillion-dollar valuation about a decade ago when its stock began trading in Shanghai — shares that were, notably, mostly owned by the Chinese government. Those shares dropped off rather dramatically since, as PetroChina (which, today, also lists on the New York Stock Exchange) is now worth about $205 billion.
Apple, on the other hand, saw its stock steadily climb since its unexpectedly strong earnings beat the mid-week mark and, as of the close of the markets yesterday, saw its stock price still above the $207.04 a share mark, making it the first firm in U.S. history to both hit and close the day with a 13-digit market cap.
The occurrence is both surprising and not.
On the not surprising side, the “will Apple/when will Apple hit the $1 trillion mark for a market cap” has been a popular question for fanboys, market watchers and investors since at least 2014, when Apple released the iPhone 6 with a rapturous reaction from the market. For many, yesterday’s events were a long time in coming — and a natural outcome to Apple’s explosive rise toward domination in the era of the smartphone.
That opinion, though, was far from universal, even as recently as a few weeks ago. Some analysts were still betting that, ultimately, Amazon would beat Apple over the trillion-dollar finish line because, while its market cap was smaller going into summer 2018, it’s growth rate was notably faster. And that’s only going back in time a couple of weeks. If one happened to hitch a ride to 1996 (22 years ago), well, “surprised” probably wouldn’t quite cover the reaction of the average consumer.
If one were to step out of a time machine and announce that, 22 years into the future, Donald Trump was the U.S. President and Apple was the biggest company on earth — valued at $1 trillion — because it invented a very slick, pocket-sized supercomputer, one’s listener might not only find the news about President Trump surprising, but they probably would not have believed the second part.
In 1996, Apple’s stock was trading for less than a dollar, it was teetering on the edge of bankruptcy and its market cap was far less than a $7 billion — and the closest thing it had in its line-up to a pocket-sized supercomputer was the much-maligned and hated Newton. Steven Jobs famously noted the firm was about 90 days form bankruptcy Newspaper headlines and magazine covers were dotted with questions, wondering if Apple — the iconic American computer company, born in a Silicon Valley garage — would die an ignominious death after a long period of consumer indifference.
That, of course, did not happen. Instead, Apple brought back Steve Jobs. And though Steve Jobs’ return in 1997 was a shot of adrenaline for the firm, three years into his second round of CEO-ship, Apple was still less than 5 percent of the personal computers market.
However, Ken Segall — an author and advertising copywriter who helped conceive the “Think Different” campaign shortly after Jobs’ return — noted that, by the time Steve Jobs was in the big chain for his second run at being the head of Apple, he was already thinking beyond the “computer market as the world understood it.”
“Steve had a kind of elitist point of view,” Segall said. “He didn’t care what people wanted and had no desire to do any kind of research. He wanted Apple to dream up things people couldn’t imagine.”
And from 2001 to 2010, Apple began rolling out those unimagined products at a startlingly rapid pace (the most notable of which was, of course, the iPhone), and pushed Apple’s market cap over the $100 billion mark for the first time in the company’s history. However, that 2001 to 2010 period also saw the launch of the iPod, iTunes, the iPad and the App Store — all of which did their part to change not only what devices people owned, but how they shopped, communicated with others, read, listened to music and consumed media.
Though Apple’s CEO Tim Cook is often derided for lacking Steve Jobs’ creativity (since Apple has not put out an epoch-making product like any of the above-named innovations), it seems fair to note that almost no firm in the history of humanity has ever quite had a product run like Apple’s in the first decade of the 2000s. Moreover, when Cook took over the helm at Apple in 2011, Apple’s market cap was $624 billion. Overall, Cook has grown Apple’s stock price fourfold in his tenure as the firm’s CEO.
Not bad for a “boring manufacturing guy from International Business Machines,” Bloomberg noted.
So now what?
Most analysts agree that Apple likely won’t be alone on the trillion-dollar market cap mountain for long. Amazon, Google and Microsoft have all had big growth this year so far, and are within spitting distance of hoisting themselves up next to Apple. Amazon is worth nearly $900 billion, while Google and Microsoft are each now worth more than $800 billion.
However, Wall Street thinks that, while its rivals are still climbing, Apple will likely keep scaling the trillion-dollar market cap summit. Thirteen analysts currently believe an appropriate target stock price for Apple is $225. Some really enthused Apple bulls are targeting $275 a share, which would push Apple’s market cap to $1.3 trillion. To put that in perspective, Apple could, at that point, lose $1 trillion and still be worth more than double IBM.
Will it always remain as such? Probably not, and Apple has many competitors for its throne. But whatever else happens, Apple will always have gotten there first — and done it as the cap-off to one of the great comeback stories in American business history.
If that doesn’t deserve the sizzle of the week, nothing does.