Apple Is Worth $2 Trillion, Punctuating Big Tech’s Grip - The New York Times
▻https://www.nytimes.com/2020/08/19/technology/apple-2-trillion.html
As recently as mid-March, Apple’s value was under $1 trillion after the stock market plunged over fears of the coronavirus. On March 23, the stock market’s nadir this year, the Federal Reserve announced aggressive new measures to calm investors. Since then, the stock market — and particularly the stocks of Apple, Microsoft, Amazon, Alphabet and Facebook — largely soared, with the S&P 500 hitting a new high on Tuesday.
Investors have poured billions of dollars into the tech behemoths, betting that their immense size and power would serve as refuges from the pandemic-induced recession. Together, those five companies’ value has swelled by almost $3 trillion since March 23, nearly the same growth as the S&P 500’s next 50 most valuable companies combined, including Berkshire Hathaway, Walmart and Disney, according to S&P Global, the market analytics firm. Apple’s valuation alone rose by $6.8 billion a day, more than the value of American Airlines.
Ce n’est pas vraiment l’innovation qui fait la bourse
Apple’s rapid rise to $2 trillion is particularly astonishing because the company has not done much new in the past two years. It has simply built one of the tech industry’s most effective moneymakers, which has such a firm grip over how people communicate, entertain themselves and shop that it no longer relies on groundbreaking inventions to keep the business humming.
When Apple first reached $1 trillion in August 2018, it came after decades of innovation. The company, founded in 1976 by Steve Jobs and Steve Wozniak, churned out world-changing products like the Macintosh computer, the iPod, the App Store and the iPhone.
Since then, it has mostly tweaked past creations, selling gadgets with names like the Apple Watch Series 5, the AirPods Pro and the iPhone 11 Pro Max. It has also pushed into services such as streaming music, streaming movies and TV programs and providing news, selling subscriptions for them.
Apple has also wielded another powerful tool to boost its valuation and enrich its investors and executives: stock buybacks. Since the company’s value hit $1 trillion, it has returned $175.6 billion to shareholders, including $141 billion in stock buybacks. Apple has repurchased more than $360 billion of its own shares since 2012, by far the most of any company, and has announced plans to spend at least tens of billions of dollars more on Apple stock.
Apple has increased its buybacks since it used the Trump administration’s 2017 tax law to bring back most of the $252 billion it had once held abroad. (The law saved it $43 billion in taxes on the move, according to the Institute on Taxation and Economic Policy, a research group in Washington.) Apple has $194 billion in cash and bonds.
Buying back stock generally increases a company’s share price, in part because it reduces the total number of shares for sale. Critics have argued that it also increases inequality because it mostly enriches wealthy investors and the company’s own executives, who are often large shareholders, as is the case with Apple. Executives and some economists said that returning excess cash to shareholders is better than sitting on it.
Apple is the second publicly traded company to hit $2 trillion. Saudi Aramco, Saudi Arabia’s state-owned oil company, went public in December and briefly exceeded the $2 trillion mark. It remained the world’s most valuable company until Apple surpassed it last month.
Others are vying to reach the $2 trillion mark soon. The candidates likely to hit that milestone next? Microsoft, Amazon and Alphabet.