CUPERTINO — Silicon Valley technology giant Apple on Thursday became the first public company in U.S. history to reach a $1 trillion market value, ahead of rapidly rising Seattle-based Amazon, after another strong quarterly earnings report and revenue outlook that lifted Apple’s shares.
Apple first reached its trillion-dollar market capitalization when its share price topped $207.05 shortly before 9 a.m. PDT Thursday. Analysts calculated Apple’s market capitalization by multiplying the share price with the outstanding share count — or how many shares are currently in the market.
Apple shares later surged above the $207.05 share price that put its market value at the $1 trillion level, given the company’s new outstanding share count released Wednesday.
Apple’s outstanding share count was at 4,829,926,000 as of July 20, according to the company’s 10-Q filing to the Securities and Exchanges Commission on Wednesday.
By around 11:08 a.m. PDT, Apple shares traded at $208.14, up about 3.3 percent on the day.
The milestone is the culmination of Apple’s persistent growth and continued delivery of products that at times have been revolutionary and other times evolutionary, but nevertheless popular worldwide with consumers. From the early days of the Macintosh computer in the 1980s to later, more portable innovations such as the iPod, iPad, iPhone and Apple Watch — offering platforms for app-based services — Apple’s products and vision have lifted the company to new heights for a U.S. public company.
Experts pointed to the leadership shown by Apple’s late co-founder Steve Jobs and current CEO Tim Cook as pivotal to the company’s enduring success.
“Symbolically, it’s an important milestone which speaks to how transformational, successful and unparalleled the Apple ecosystem is that Jobs and Cook have created in succession,” said Dan Ives, GBH Insights’ head of technology research. “It just speaks to how revolutionary the iPhone’s been.”
While Wall Street and the world watched for Apple to reach the $1 trillion market capitalization early Thursday, the company apparently managed to get a little ahead of itself in marking the milestone. Apple’s own Stocks app inadvertently reported Apple hitting a $1 trillion market cap before its shares actually reached the $207.05 level that made that historic market value a reality. The cause of the glitch reportedly was that the app didn’t reflect the latest company filing showing that Apple had bought back more of its shares, which meant its stock price had to hit a higher share-price threshold than was necessary under the previously reported count of outstanding shares. Apple’s Stocks app, which is built in to the company’s iPhones, reportedly pulls data from Yahoo Finance as its source of stock price information.
Although Apple did get to the $1 trillion market value soon afterward, it wasn’t the first corporation worldwide to reach that market capitalization. Chinese oil giant PetroChina Co. did it first in 2007. But PetroChina’s trillion-dollar market capitalization was short-lived, and it’s now trading at a market value of around $214 billion, Forbes reported Wednesday.
Unlike PetroChina’s speculative explosion that propelled the oil company to the trillion-dollar pinnacle, Apple’s climb has been a slow, steady advance built on consecutive quarters of solid growth. The final push followed Apple’s strong fiscal third-quarter earnings and good revenue guidance for the fourth quarter on Tuesday.
Apple has paved the way for other technology companies, like Amazon, to reach the summit, according to analysts.
“Silicon Valley wouldn’t be what it is today without Apple,” said Ives. Ives also forecast Amazon — currently still shy of a $900 billion market cap — could join Apple in the trillion-dollar club in 2019.
After its $38 billion one-time tax payment to the United States government in January under the new tax reform, Apple announced a $100 billion stock buyback plan to reduce the share count in the market.
Cupertino-based Apple reported Tuesday that sales of its iPhones only increased 1 percent in its fiscal third quarter from the same period a year earlier, but because of the popularity of its pricier smartphone models like iPhone X driving sales, total revenue from iPhone sales jumped 20 percent from the same period a year ago.
As iPhone revenues continued to jump, Apple’s most lucrative revenue growth came from services like Apple Music and Apple Pay and wearables like AirPod earphones and Apple Watch.
“They extracted more revenue and more profit from the most incentivized customers in the market,” said KeyBanc Capital Markets analyst Andy Hargreaves. “As for the wearables, after early stumbles and not knowing quite what to do, Apple hit its stride. They added increments of growth surrounding the iPhone.”
However, geopolitical risks in the near term have the potential to derail some of Apple’s momentum. A looming trade war between the United States and China could possibly result in China slapping tariffs onto Apple products such as the Apple Watch.
In a conference call with analysts Tuesday, Cook said he hoped that “calm heads will prevail” in both Washington and Beijing.
Depending upon how it unfolds, the China-U.S. trade dispute could be particularly painful for Apple as mainland China remains a huge consumer base and the hub of most of its manufacturing, Hargreaves said.
But Creative Strategies’ consumer technology analyst Carolina Milanesi said the “impact of new tariffs on phones has been short-lived” in the past.
“My proof points are South Korea and their increase in tax of a few years ago and Russia, where there was a crackdown on import duties between 2010 and 2012,” said Milanesi. “In both occasions, prices grew, and the market slowed down for a few quarters before picking back up.”
Analysts suggested Apple’s new U.S. market cap record will have almost no impact on the company’s day-to-day operations or its consumers. Furthermore, they said they don’t expect the milestone to galvanize investors to sell or buy more Apple shares.
“From a day-to-day perspective I am sure it is business as usual (for Apple),” said Milanesi. “Does it matter for Apple? Sure, it proves that investors believe in the path they are on, especially given some of the bets they made with iPhone X pricing and the focus on services.”
But analysts noted that Apple reaching the trillion-dollar market capitalization does have some significance.
“I’d be a fool to say there is literally no importance to it,” said Hargreaves. “It is a notable moment. It just doesn’t mean much in a practical sense. Like, is turning 50 (years old) any different than turning 49?”
Staff reporter Rex Crum contributed to this article.
