If you are wondering why Apple’s share has been the darling of investors, including Warren Buffet, this is an eye opener and makes a fascinating read.
On the day Apple launched its newest flagship, the value of its stock price placed the company’s market capitalization at $830 billion, which raises the question – Will Apple be the first listed company to hit the Big T?
If history is of any guide, the unveiling of the 10-year anniversary edition of Apple’s ubiquitous device, the iPhone X, is likely to signal that the $1 trillion milestone is well within its reach.
Apple’s share, on average, have gained 33% after it launched iPhones, dating back to Jan 9, 2007. Its share prices have gained in the following year after seven of the 10 announcements, however it did fall in three years.
From their current stock prices, Apple’s shares need to gain around 20% to hit the world’s first 13-digit market cap. Although a few members of the Saudi royal family and a few analysts have forecast that Saudi Aramco’s valuation would touch $2 trillion, if not more, when it comes out with its IPO next year.
Incidentally, of the 38 Wall Street analysts covering Apple, two are already forecast Apple’s stock price targets above the $1 trillion level.
Case in point: As per Brian White, an analyst from Drexel Hamilton, has set $208 as the price target for Apple’s shares, the highest on Wall Street. Apple’s shares at those levels would result in a market cap of $1.075 trillion
“We continue to believe Apple’s stock will not only benefit from the upcoming iPhone cycle but also the company’s capital distribution initiative, attractive valuation and potential new innovations,” wrote White in a note to clients. “As such, we do not believe Apple’s run will end with today’s iPhone event but still has attractive upside potential.”
This optimism was also shared by Katy Huberty from Morgan Stanley who in a note to clients wrote, the augmented reality (AR) features in Apple’s iPhone X “has the potential to become the next killer app that accelerates smartphone upgrades and drives increased services monetization and growth.”
She has placed Apple’s price target at $182, 13% above Tuesday’s closing price of $160.86; at that price level Apple’s market cap would be $940 billion, just short of the $1 trillion mark. To push it to the other side, Huberty has a “bull case” target of $253 on the stock, or just over $1.3 trillion at current shares outstanding.
Apple shares are up 52% in the last year.
Since Apple’s first announcement of the iPhone product line in January 2007, its stock has gained more than 1,200% and has delivered a total return, including reinvested dividends, of more than 1,375%.
Its annualized total return of 28.7% in that period is nearly 300% that of the Nasdaq Composite Index and almost 400% of the benchmark S&P 500 index.
Three years ago, Apple split its stock on a 7-to-1 basis. Adjusting for that, one share of pre-split Apple stock would be worth one nearly full iPhone X today.