Reporting by XinZhiyuan
EDIT: Sleepy
【New Zhiyuan Guide】The $3 trillion club opens!
On January 4, Beijing time, a company that started in a garage in California in 1976 once again set a new record.
At around 2:45 a.m., Apple briefly let its market value exceed $3 trillion (about 19 trillion yuan) with a price of $182.88 per share.
Although the follow-up retreated, it closed at $182.01. Apple's eventual market capitalization still rose 2.5 percent to $2.98 trillion.
Fast forward to december 1980, When Apple went public for $1.8 billion.
Nearly 40 years later, in August 2018, Apple became the first ever U.S. company with a market capitalization of $1 trillion.
Soon, 2 years later, in August 2020, Apple's market capitalization exceeded $2 trillion.
And the third $1 trillion, Apple only took 16 months and 15 days.
In this regard, Forbes columnist Yang Jianyong said: "In fiscal 2021, Apple's revenue is 365.8 billion US dollars and net profit is 94.68 billion US dollars (600 billion yuan). This net profit scale is equivalent to Huawei's annual revenue. In 2021, Huawei's revenue is expected to be 634 billion yuan."
Higher than the UK GDP
A $3 trillion valuation is staggering from almost any angle.
This size is about equal to 2.5 Teslas, 5.3 Tencent and 7.3 Moutai.
It could even be the fifth-largest economy in the world, surpassing the UK's GDP of 2.76 trillion in 2020, behind the US, China, Japan and Germany.
According to Howard Silverblatt, an analyst at S&P Dow Jones Indices, Apple now accounts for nearly 7 percent of the total value of the S&P 500, breaking IBM's 1984 record of 6.4 percent.
Its market capitalization can even account for about 3.3% of the value of all stock markets in the world.
There is a lot of money, not a big problem
Since co-founder and former CEO Steve Jobs released his first iPhone in January 2007, Apple's stock price has climbed about 5,800 percent, far outpacing the roughly 230 percent increase in the S&P 500 index (SPX) over the same period.
Some argue that the spike in Apple's stock price could be interpreted as a hedge bet.
As the Fed begins to pull out of monetary stimulus, investment managers are ditching growth stocks and seeking refuge at Apple as a cash or gold equivalent.
With a fortress balance sheet of about $190 billion in cash, some analysts believe that this makes Apple not only enough to buy companies like UPS, Starbucks or Morgan Stanley directly, but even withstand almost any tough economic situation.
In addition, Apple has a very stable cash flow.
In the first three quarters of 2021, Apple's revenue exceeded $282 billion, up 54%, 36% and 29% year-over-year, respectively.
In the last quarterly report, Apple's net income rose 62 percent, and earnings per share increased from $0.73 to $1.24.
Among them, the year-on-year growth in each sales category exceeded 20%, with the iPhone leading with a growth rate of 39%. The growth in the service category was largely made up of high-margin subscription revenue, which grew 27 percent, up significantly from 16 percent the year before.
CFRA Research analyst Angelo Zino said about a quarter of sales now come from Apple's services business, which is twice as profitable as hardware such as iPhones and Macbook PCs before corporate overhead and marketing costs are taken into account.
It can be expected that Apple's cash flow will be at least $100 billion per year over the next decade, and it is likely to continue to rise.
That doesn't mean there are no risks, though.
In fact, Apple is particularly vulnerable to one of the biggest macroeconomic concerns of 2022: inflation.
Unlike software and internet companies, Apple's main business involves selling physical hardware products. This means that if wages, transportation and raw material expenses continue to climb, Apple's profitability will be suppressed.
Apple said the rising cost of transportation has begun to have a gradual impact.
In addition, apple has limited ability to raise prices further because the iPhone and Mac are priced higher than their closest competitors.
In addition to external economic factors, some analysts believe that Apple's prospects are not as good as expected.
At the end of October, sales at the tech giant did not meet analysts' expectations. CEO Tim Cook also said the chip shortage would lead to worse results.
Bloomberg has reported that Apple has told its suppliers that demand for iPhones is slowing.
After Jobs' death, Tim Cook became CEO in 2011, and under his leadership, Apple dramatically increased revenue from services like video streaming and music.
That has helped Apple reduce its reliance on the iPhone, from more than 60 percent in 2018 to around 52 percent of total revenue in fiscal 2021.
In addition, the rapid popularization of technologies such as 5G, virtual reality and artificial intelligence has also increased Apple's allure. Examples include upcoming self-driving cars and AR glasses.
But it will take years for these products to drive the multibillion-dollar giant.
Some investors are also concerned that Apple has reached its limits in how much it has expanded its user base and how much cash it can squeeze out of each user, and there is no guarantee that future products will be as profitable as the iPhone.
Milestone products
iPod
The first iPod, released on October 23, 2001, could hold 1,000 songs, had a battery life of 10 hours, and cost $399. On November 19, 2001, Apple's stock price rose 6.6 percent to close at $10 per share.
The iPod family also sets the standard for Apple's competitors in the portable media player market.
The release of the iTunes Store in 2002 (and a Windows-compatible version) made the iPod a viable option for Windows users. By the end of 2004, Apple had sold more than 10 million iPods.
But as more people use their phones to play music. Apple began phasing out the iPod: the iPod Classic, Nano, and Shuffle were no longer in production, leaving only the iPod Touch. As of 2014, the iPod accounted for less than 1% of Apple's total global revenue.
iMac and MacBook
The iMac was released in May 1998, when Apple was trading at $7.58.
While there was no direct impact at the time, Apple's stock reached $9.22 three months later, meaning its stock price rose 21.6 percent.
Apple's stock reached $27.53 two years after its release, up 263 percent.
The popularity of the iMac paved the way for products such as the PowerBook G4 in 2001 and the MacBook Pro in 2006.
But despite apple's popularity with desktops and laptops, it has only a small market share in personal computers. As of the first quarter of 2021, its market share was 15.1%.
iPhone
On January 9, 2007, the first iPhone was officially released. About 270,000 phones were sold within the first 1.25 days of launch in June.
A month later, Apple shares were up 15.9 percent.
As of the first quarter of 2021, the iPhone has an 18% share of the mobile phone market.
iPad
In January 2010, Apple released the iPad, which went on sale in early April of the same year.
On the first trading day, Apple's stock price rose slightly more than 1%. Soon after, it was up more than 40%.
As of the first quarter of 2021, Apple's market share in the tablet space was 31.7%.
Wearables, homes, and accessories
This section consists of a series of innovative products, including Apple Watches, smart home products, headphones, charging cases, audios and watch bands.
Among them, the Apple Watch is one of the biggest driving forces.
Analysts estimate that apple sold more than 3 million watches with the launch of its first watch in April 2015.
This segment of revenue grew to $13 billion in the first quarter of 2021, up 30 percent from the same period in 2020.
Resources:
https://www.nytimes.com/2022/01/03/technology/apple-3-trillion-market-value.html
https://www.bloomberg.com/opinion/articles/2022-01-03/are-investors-putting-too-much-faith-in-apple
https://www.investopedia.com/insights/worlds-top-economies/