The world was shocked two years ago when Apple’s market capitalisation exceeded $1 trillion, beijing, early on August 5th. However, this is not the case, given the size of the market as a whole. That’s because, in August 2018, Apple’s position is not unprecedented, even if the market value exceeds trillion. Even though Apple’s market capitalisation has grown, so has the market as a whole. At the time, Apple’s weight in the Standard and Poor’s 500-stock index was still comparable to that of giants such as Exxon Mobil and IBM at their heyday.
But Apple’s influence on the market is entering uncharted territory as the market value increases further. Apple’s market capitalisation has more than doubled since last August, and it now has a weighting in the Standard and Poor’s 500-stock index over taking on IBM in 1985 as the most weighted component in 40 years.
“In our market, the winner is sure to continue to win and win more,” said Kim Forrest, chief investment officer at Bokeh Capital Partners. “
Apple shares now weigh 6.5 percent in the Standard and Poor’s 500-stock index, surpassing IBM’s 6.4 percent 35 years ago, according to data compiled by the Standard and Poor’s Dow Jones Indices and Bloomberg. Apple’s total market capitalisation is $1,875bn, about 7 per cent because of the $2 trillion mark.
This figure reflects Apple’s strength. Few companies have reached Apple levels in the year of the New Crown virus epidemic. Apple’s shares are up 49 percent this year, and only Amazon has done better in any U.S. company with a market capitalization of more than $300 billion. Apple’s quarterly revenue beat Wall Street expectations, pushing shares sharply higher as isolated consumers showed huge demand for new iPhones, iPads and Macs.
Some analysts expect Apple’s market capitalisation to reach $2 trillion. Tom Forte, of D.A. Davidson and Co, expects Apple’s share price to rise to $480 a share over the next year, 9.4 percent above current levels. That would also mean Apple’s market capitalisation would be $2.05 trillion.
Apple’s shares have risen 18 per cent in the past seven trading days, the biggest gain since 2009. Apple’s market capitalisation has risen $570 billion so far this year, ranking fifth among the Standard and Poor’s 500-stock index.
Market watchers are beginning to question whether Apple’s share price is growing at a sustainable rate. Apple’s stock is trading at 33 times earnings, a 30 per cent premium to the Standard and Poor’s 500 index, a high valuation not seen in more than a decade.
“Apple has not introduced new products or vaccines to save the world from the new virus,” said Matt Maley, chief market strategist at Miller Tabak. In the absence of new products, there was an 18 per cent gain in seven trading days. Although this is not a ‘tulip bubble’, it does mean that the share price is going up a bit too fast and needs a correction. (Vickin)