Apple: The First U.S. Company In The $700 Billion Market Value Club

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Feb 11, 2015

Apple (AAPL, Financial) has set a new record. It has gone on to become the first U.S. company with a market value of more than $700 billion according to share data from S&P Capital IQ and historical data from S&P Dow Jones Indices. This value was based on stock at the close of trading on Tuesday.

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Apple, an American iconic company specializes in designing, developing and selling computer software, personal computers, phones, consumer electronics and online services. Currently the market capitalization is $696.71 billion. Founded in 1976 by Steve Jobs, Steve Wozniak and Ronald Wayne, Apple is currently the world's second-largest IT company after SAMSUNG ELECT LTD (SSNLF, Financial) by revenue. According to 2014 reports, Apple operates from 437 stores in about 15 countries. It also employs around 72,800 employees. It operates iTunes Store, the world's largest music retailer. With many success stories revolving around the company, obviously the $700 billion market value hasn't come as any surprise to us.

Apple's revenue:

Shares of Apple rose 1.9%, IE $2.29 to $122.02 Tuesday. This is a whopping 60% rise is the stock compared to last year. Apple's value is far ahead as compared to the second most valuable company- Exxon Mobil (XOM, Financial). Exxon Mobil Corporation is currently valued at $385.4 billion. Apple is worth nearly twice as much. This is surely a new record, a new ground-breaking valuation. At the third position is Berkshire Hathaway Inc. (BRK.A, Financial) valued at at $370 billion and Microsoft Corporation (MSFT, Financial) is at the fourth position at $349 billion, according to FactSet Research Systems Inc. (FDS, Financial), a financial and Software Company.

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Apple's market value has seen a rise of more than 50,600% since the initial public offering in 1980. The company's value has doubled since Tim Cook became the CEO. Apple's value was estimated to be $100 billion in May 2007. It rose to $200 billion in September 2010. The numbers doubled and tripled in 2012. August 2012 saw Apple's evaluation at $600 billion. Finally, the market value gain stands at $700 billion as of today. Analysts predict that the stock of Apple will hit $130.70 a share in 18-months. If their predictions are right, there is still 7% upside. If at all the stock reaches $130.70, Apple's valuation would hit $761.3 billion. That is surely an astounding figure. Ben Reitzes, an analyst at Barclays PLC (BCS, Financial) said that the stock price may even reach $150. However, some analysts claim that if the stock gets too high, it may pose as a threat in the near future. But nothing can stop this overwhelming force to move in the positive direction.

The CEO is Steering the Ship

Apple CEO Tim Cook took part in the Goldman Sachs Technology and Internet Conference held at San Francisco. This conference is said to be a factor in the valuation. The CEO hyped “Apple Watch”, which he promised would tap people out of their laziness. He also discussed creating a 1,300-acre solar farm in California. He said that this project was focused on Apple's commitment towards CSR and clean energy. Alex Gauna, analyst at JMP Securities (JMP, Financial) said that there won't be any competitive risk to Apple's business as well as profit margins. Since their dominance is well seen, other electronic companies will feel the heat to challenge Apple.

Investors have never hesitated, but have shown their full-fledged love while investing in Apple stocks. The company has about 5.82 billion shares outstanding. The first quarter earnings report suggests that the company made a whopping $18 billion on $74.6 billion in revenue. This is the most profitable three month record than any other company.

Reitzes has also stated that not much of attention is being paid to the free cash flow. But the last quarter has been a boon due to the high revenue generation. Hence, chances for future cash generation are also high. Apple is named after a fruit, a discovery which proved gravity. At the rate at which stock is increasing, we can safely say that it is defying the force. The statistics are currently on fire. It raises a mind-boggling question: How far can Apple go? Let's wait and watch.