Overnight (our time), Apple Inc. (NASDAQ: AAPL) achieved an incredible milestone. It became the first publically-listed company in the world to achieve a market capitalisation of more than US$2 trillion (A$2.78 trillion).
On the latest day of trading over in the United States, Apple pushed over US$473 a share, which was enough to seal the deal on the US$2 trillion ceiling.
If you’re struggling to try and get your head around the stupendously massive number that is US$2 trillion, picture this. In 2019, the entire gross domestic product (GDP) of Australia was around US$1.4 trillion. That’s the value of every good and service sold in Australia last year. Yep, one company is worth more than that.
But it’s just another milestone for Apple. It was only just over 2 years ago that Apple was crowned the first US$1 trillion company. And today, the company gets the US$2 trillion crown as well.
It was a close race. There are a few companies that were close contenders for the US$2 trillion title. At the time of writing, Amazon.com Inc. has a market capitalisation of US$1.65 trillion. Microsoft Corporation is on US$1.62 trillion and Alphabet (owner of Google) is on US$1.07 trillion.
But none of these companies ended up getting in the way of Apple’s birthright.
So what is it about this company that is so darn special?
The Apple of investors’ eye
We all know Apple. Even if you don’t have an iPhone, Mac, iPad or set of Airpods, chances are you know someone who does. This statement can probably be applied to almost anyone living in most countries of the world.
This company has built such a phenomenal brand that it has the luxury of charging pretty much whatever it likes for its products. According to Apple’s latest quarterly filing, it has a gross margin (how much of a sale it keeps as profit) of 38%. That’s an incredible metric. It implies that the company makes a luxury-item premium on mass-market products – something most other companies could only dream of.
In my view, Apple’s brand is what has enabled the company to reach US$2 trillion. There are a lot of great brands in the world. Coca Cola, Louis Vuitton, Toyota, Google, Nike… the list goes on. But Apple is a cut above the rest. The kind of loyalty the Apple brand inspires is unrivalled. People literally queue for hours to buy the company’s high-margin products. And there are some people who will buy whatever product Apple releases, just because it’s Apple. It’s trusted, it’s unique and it’s special.
So when you’re looking for your next investment, you might be tempted to ask yourself ‘is this the next Apple’. In some ways, I think this attitude could be helpful. But at the end of the day, no other company is truly like Apple. That’s why Apple is the sole member of the US$2 trillion club today.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares) and Nike. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Microsoft, and Nike and recommends the following options: long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, short January 2022 $1940 calls on Amazon, and long January 2022 $1920 calls on Amazon. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and Nike. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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