One trillion dollars!

13th August 2018
-News, IAM

Daniel Pfund, Senior Financial Analyst

Last week, Apple shares jumped by 8.9%, following the publication of their good results for the second quarter. In doing so, the company achieved a market capitalization exceeding US $ 1 trillion, a first in the United States. It was a race with Amazon, which had published some excellent results a week before Apple, but never managed to attain this level; its capitalization being approximately $ 900 billion. Remember that market capitalization is simply the price of the stock multiplied by the number of shares outstanding.

Basically, this round figure does not mean anything except the fact of being the largest US company and having the greatest weight in capitalization weighted indexes (like the S & P 500 for example, but not the Dow Jones). However, a study has shown that often the largest companies are overvalued because they are owned by popularity. In fact, over 40 years, the company’s share with the largest capitalization at the end of the year underperformed the S & P 500 index by an average of -4% the year after. For all Apple shareholders, let’s hope that this time it’s different.

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