There’s no question that Apple is one of the pioneers in the tech world, specifically when it comes to consumer electronics.
After all, it’s been a market leader and innovator in everything from its Mac computer line to its iPhone to its iPad. Yes, there are many other similar smartphones and tablets for sale on the market today, but Apple was the first to reach market with the products — the rest, though good products, were followers looking to capitalize on Apple’s success.
Just this week, Apple’s stock hit another milestone after rising 10.6 percent since the company posted lower-than-expected second quarter revenue numbers. In six sessions this week, it rose more than 15 percent, marking the biggest six-day gain the tech giant has seen since a 20 percent rise back in 2009. Should Apple’s stock rise another 10 percent, it will hit the $1 trillion mark.
As it stands, Apple is the most valuable U.S. company. It’s current total market share is more than $910 billion. And that’s likely to continue to rise, for various reasons.
To begin, people love Apple products, and Apple shareholders love Apple stocks. Consider this: were you to have invested $1,000 in Apple stock 10 years ago, you’d have more than $7,000 today. That’s a pretty significant return on investment, especially when you consider that Apple stock is fairly inexpensive compared to others.
Apple also got a big boost this week when Warren Buffett reaffirmed his belief in Apple stock. The CEO of Berkshire Hathaway purchased 75 million shares of Apple, adding to the 165 million that the company already owns. Buffett is quick to quip that he doesn’t use an iPhone, but that doesn’t mean he doesn’t know a good investment when he sees one.
Buffet has gone on the record to say that he desires to own 100 percent of the stake in Apple one day. Currently, Buffett is the No. 2 shareholder of Apple with 240 million shares (or about 5 percent). Interestingly enough, he didn’t own any a few years ago. That’s when he was still hung up on IBM stock, something that he admits was an investing mistake.
There are various other reasons behind Apple’s surge in the market. For one, it isn’t catching flack from President Donald Trump like Amazon — the U.S.’s second most valuable company in terms of market share. And aside from an aggressive product development schedule where new product launches are always met with great fanfare, Apple has also benefited from some terrific publicity over the years. Founder Steve Jobs’ life has been documented in several popular Hollywood movies, and Apple has been the subject of numerous books and documentaries. Apple’s stock hasn’t always been as strong as it is today, and the company has had its ups and downs with the market and investors, but clearly those who stuck with the company are being rewarded nicely.
One other thing that’s likely going to behoove Apple shareholders is tax reform. That’s because Apple has about $250 billion abroad in cash, and the new tax law means it’s more likely to bring this money back to the U.S. and invest it accordingly. An increase in returns is likely to follow, which is good for investors.
Though Apple’s second quarter earnings report showed lower-than-expected iPhone sales numbers, it’s something that’s clearly not worrying investors. Perhaps one reason is because of the strong sales numbers the company is posting abroad, notably in China. In the second quarter, Apple states that sales of its products in China grew by 21 percent, marking the best year-over-year growth in 10 quarters. While the iPhone was a big part of this sales surge, it was actually the likes of the Apple App Store, Apple Music and Apple Play that really helped the company make bank. It’s these value-added services that also help Apple’s bottom line.
As Apple nears record market share numbers, it’s clear that the company isn’t going anywhere and will likely only continue to be highly successful and highly profitable. Are you along for the ride?
Regards,
Ethan Warrick
Editor
Wealth Authority
