Apple becomes world’s first company worth $1 trillion
Milestone is good for millions whose 401(k)s include its stock
Apple, which already held the crown as the nation’s most-valuable company, made Wall Street history Thursday when it became the first publicly traded company in the world to reach a market value of $1 trillion.
Apple, whose stock is owned by investors ranging from billionaire Warren Buffett to mutual fund giant Vanguard to millions of working Americans through funds owned in their 401(k)s, passed the milestone days after reporting another stellar quarter, highlighted by a jump in revenue to $53.3 billion and the sale of 41.3 million iPhones.
The iPhone maker broke the $1 trillion barrier when its stock briefly hit the magic share price of $207.05, according to Nanex, which supplies market data to the financial industry. Online brokerage TD Ameritrade said the historymaking trade occurred at 11:48 a.m. ET.
“Apple has gone where no company has gone before,” said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.
The individual company milestone comes after an extraordinary stretch of tech innovation and arrives as the bull market for stocks, now more than 9 years old, looks to overtake the 1990s bull as the longest in history later this month.
Heading into Thursday’s trading session, Apple shares were up 19.1 percent so far this year, more than double the return of the broad S&P 500, which has gained 5.2 percent.
Apple’s rise has been driven largely by its wildly successful iPhone, which has been instrumental in shaping the mobile world we live in and is now a staple of daily life for tens of millions of Americans who use it to make calls, send texts, snap pictures, check Facebook and stay on top of the news.
Apple’s good fortune is also good news for Main Street investors. With a nearly 4 percent weighting, the stock is the biggest holding in the Standard & Poor’s 500 stock index, an investment that is owned by most individual investors through index funds and exchange traded funds that track it and in 401(k) plans.
“Apple’s gain boosts about every 401(k) since it is a big holding in just about every large-company mutual fund,” said Paul Hickey, co-founder of Bespoke Investment Group, a New York-based market research firm.
Wall Street pros say Apple’s ability to grow so large has been driven by a confluence of factors, ranging from its global reach, the explosion in global smartphone demand, and the rise and proliferation of the internet.
Apple also enjoyed a “first mover advantage,” as it got ahead of the competition in the mobile phone space in 2007 when it launched the first version of its iPhone.
“Apple has global market appeal and brand power,” said Joe Quinlan, chief market strategist at U.S. Trust in New York. “With the iPhone, they’ve created market demand virtually out of thin air.”
The company is also generating significant sales from its services unit, which includes things like its App Store, Apple Pay, iTunes and its iCloud business. In its most recent fiscal thirdquarter, services revenue jumped 31 percent to $9.55 billion.
To put the $1 trillion market value into perspective, Apple would rank as the 15th biggest economy in the world if it were a sovereign nation, says Quinlan.
Apple’s ascent to the $1 trillion mark could spark some talk of a top for the stock and the broader market, but some Wall Street pros downplay one stock’s effect on an S&P 500 stock index that is valued at nearly $24 trillion.
“What does it mean for the market? Not much, especially since Apple’s and the market’s valuation are not showing signs of exuberance,” said Davidson of Wells Fargo Private Bank.
And given that economic conditions in the U.S. are still good, the stock market “still has room to run,” Davidson said.