By William Meyer
Apple’s market dominance continues and the company’s valuation and share price scales new heights, almost daily.
The valuation is mind-blowing. It took 38 years for the company’s value to hit $1 trillion two years ago. Last week, its value crossed the $2-trillion mark and the share price didn’t stop there. It crashed through $500 per share and continued higher.
The company is splitting the stock four for one this week to make the shares more accessible and affordable to smaller investors. Apple shares are rising ahead of a new super-cycle of 5G iPhones that are coming to market towards the end of the year. 5G is a game-changer. There are several hundred million devices that will upgrade this year. The technology will allow much quicker access to the next generation of supremely fast wireless networks.
A share split does not change the value of the company, but it may increase demand. It may also make it easier for some shareholders to sell a portion of their shares. Investors just need to go with the trend – and for now this trend is certainly up.
“We believe iPhone 12 represents the most significant product for (Apple CEO Tim) Cook since iPhone 6 in 2014 and will be another defining chapter in the Apple growth story looking ahead,” said Dan Ives, analyst at Wedbush Securities, in an investor note earlier this month.
Of course, increased internet speeds will also spur the adoption of other Apple services, such as Apple Arcade and Apple TV.
Apple holds 8% market share in emerging markets, compared with 35% in developing markets and 15% overall global market share. Emerging markets, in particular, are a huge opportunity for Apple.
Apple’s latest results exceeded all expectations. Its share price is up 70% in 2020 already and it rose by 86% in 2019. So since January 2019, Apple’s share price is up by 215%.
The company’s services section also had a blowout quarter, adding 35 million new paid subscribers, bringing the total to more than 550 million, and it hopes to grow this to more than 600 million this year.
This is the biggest subscription business in the world. iPhone sales rose by 2%, service revenue increased 17%, the accessories business rose by 17%, Mac revenue increased 22% and iPad revenue increased 31%.
In August 2011, in an article titled “For Apple, the party is just getting started”, I advised clients to buy Apple shares. At the time, they were trading at $50 a share.
Every year I urge readers to buy Apple shares.
Another example: in May 2017 I wrote an article, “Apple – The greatest growth stock of all time”. Again, I strongly recommended Apple shares.
On August 27 1999, Apple’s market capitalisation was $10 billion. Its market value hit $800 billion on May 8 2017. That was the first time any company had ever been valued at that level.
In April 2011 I stated, in this column, that Apple was the world’s most valuable technology company and that it would soon be the most valuable company in the world, exceeding the market capitalisation (number of shares issued, multiplied by the market price per share) of Exxon Mobil.
In March 2011 I penned another column, “Plucking apples off-shore – the greatest growth stock of our time”. Again I posed the question of whether Apple shares were a sound investment. I answered with a resounding yes!
And again, I urge readers to ensure they are well-positioned, particularly in regard to their off-shore investments. Don’t just sit there! Get out and do something!