On January 3, Apple, Inc.'s market capitalization briefly exceeded $3.0 trillion, an accomplishment that no other publicly traded company has ever been able to claim. Considering that Apple began 2017 with a market cap of approximately $620 billion, that means the company has nearly quintupled its value in less than five years.
Apple's share price and earnings per share reached highs of $182.88 and $5.61, respectively, on January 3, implying that investors believed the company's stock was worth approximately 32.6 times (price to earnings, or P/E ratio) the earnings it generates. As a comparison, two of Apple's closest competitors, Samsung and Alphabet, Inc. (Google's parent company), had market caps of $1.8 trillion (P/E ratio of 25.43) and $441 billion (P/E ratio of 16.74), respectively, when this article was written on January 7. (Apple's market cap has since dropped to $2.8 trillion, implying a P/E ratio of 30.75 as of January 7 ... so cheap!). Remembering that a company’s P/E ratio is a function of growth and risk, Apple’s high numbers imply that investors think the company’s earnings will continue to grow significantly in the future.
To put this into perspective, Apple's $3.0 trillion value represents approximately 4% of total U.S. GDP for all of 2020, or more than four times Pennsylvania's 2020 GDP. Even at $2.8 trillion, the company's market cap is larger than Amazon’s and Tesla's combined ... or more than the combined market cap of JPMorgan, Samsung, Home Depot, Procter & Gamble, Bank of America and Walmart.
The 10 largest companies in the world, as ranked by market capitalization, were as follows on January 7, 2022:
It’s interesting to note that eight of the top 10 companies are based in the U.S. Saudi Arabia’s Saudi Aramco and Taiwan’s TSMC were the only foreign businesses to crack the list.
Although we have yet to value a company at $3.0 trillion, Schneider Downs has significant experience providing business valuation services to companies of all sizes and types for a wide range of purposes. For more information about our business valuation and other advisory services, contact Joel Rosenthal at 412.697.5387 or [email protected] or Steve Thimons at 412.697.5281 or [email protected].
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