Apple reaches record stock market valuation

Tech giant has been located in Cork for over 40 years

Tue, 04 Jan, 2022 - 16:42

Alan Healy

Apple’s stock market value briefly rose above $3 trillion (€2.65trn) this week, becoming the first company in history to reach such a valuation and underscoring how the pandemic has turbocharged Big Tech’s decades-long rise.

The iPhone maker’s share price has climbed steadily for years, leaving it up more than 200% since Covid first sent the world into lockdown in early 2020 and underlined the centrality of technology for work, education, entertainment, and keeping connected.

The tech giant has long associations with Ireland. The company has maintained a significant presence in Cork, operating various manufacturing, logistics, and services operations from Hollyhill for over 40 years. The campus in Cork was established in 1980, just four years after the company was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne.

The company currently employs around 6,000 people in Ireland and has expanded beyond Cork City's northside, taking up space on Lavitt's Quay in the city centre and offices in the new HQ development on Horgan's Quay.

While reaching a market capitalisation of $3trn on Monday, it failed to hold above the level through the end of the trading day. Apple closed 2.5% higher at $182.01 (€160.8) and with a market capitalisation of $2.99trn. The advance came on a broadly positive session for stocks, where Apple and Amazon.com both contributed to the Nasdaq 100 Index outperforming.

Steady revenue growth

Apple’s rally has come alongside steady revenue growth and bets that key products, along with new offerings such as virtual reality headsets and autonomous electric vehicles, have a strong long-term outlook.

“I never thought I’d see a $3trn market cap, but it really speaks to Apple’s prospects over the next five to 10 years,” said Patrick Burton, co-portfolio manager of the MainStay Winslow Large Cap Growth Fund, which holds about 2.75m Apple shares.

"We feel very good about the outlook, and continue to see meaningful opportunities ahead, with a stable iPhone franchise and growth drivers from both services and new products.”

The stock first reached $1trn in value in mid-2018 and achieved a $2trn valuation in August 2020. While it was the first US company to surpass that level, Saudi Aramco was the first $2trn company overall. Apple’s size means it has a pronounced influence on the overall equity market; its weight within the S&P 500 Index is about 7%.

Ever since it first became the world’s most valuable stock in 2011, when its market cap was under $340bn and it comprised about 3.3% of the S&P 500, Apple has rarely been far from the title. It briefly fell behind Microsoft in October, after warning about the impact that supply chain issues would have on its holiday quarter, though that second-place status was short-lived. Over the past month, the stock has risen more than 12%, compared with a 3.6% rise in Microsoft, which now has a valuation above $2.51trn.

Risks to Apple’s forward march

Despite the optimistic outlook, there are risks to Apple’s forward march. The company is facing the toughest regulatory atmosphere in its history, with governments bearing down in the US and India over its App Store practices and dealings with third-party developers.

In Ireland, the company is under scrutiny by the European Commission. It ordered the State to claim back €13bn in back taxes from Apple which both Ireland and the tech giant rejects. The commission lost the first round of the legal battle after the General Court of the European Union ruled that Apple did not avail of illegal state aid or preferential tax treatment. That decision has now been appealed to the European Court of Justice.