The year was 1997, while the cutting-edge technologies were spreading its wings beyond the boundaries of the US, there was a company on the brink of bankruptcy. Many close associates of the company had either parted ways or were exploring a suitable alternative to bid adieu to the near-death company. It was the time when the co-founder of the company, who was literally shown the door by the board mere few years before, decided to come back to turned the table by showing an exponential degree of commitment and confidence. Fast forward 21 years, and today the very company has created the history by becoming the first tech company in the world with a valuation of $1 trillion.
Alas, there is no prize for guessing it right! Indeed, it is Apple Inc. (NASDAQ:AAPL) we are talking about.
After the Thursday trading, Apple’s shares soared to new heights, making Apple achieve the milestone no one other tech giant has been able to touch, so far. The mighty one $1 trillion valuation of Apple is no more a dream for Tim Cook and Team.
In its quarterly 10-Q form submission that took place last Wednesday, Apple disclosed that it possessed 4,829,926,000 shares as of July 20, 2018. Each of these shares became much more valuable as the market capitalization of the company touched the Trillion Dollar mark.
Surprisingly, against all odds, the news has come off in a time when the company has been experiencing a lower-than-expected sales of the 10th anniversary iPhone X, though it was the best-selling model in both Q4 2017 and Q1 2018. The $1 Trillion valuation of Apple also proves that more than quantity it’s quality that matters the most, and there is a sizable number of people who are don’t mind spending few extra bucks for it.
Apple’s achievement becomes more valuable in the light of the fact that many arch rivals and longtime competitors, including Microsoft and Google, are yet to achieve the milestone.
So, what are the factors that have helped Apple sail through against all odds and contributed to the company in achieving the rare feat?
Apple Valuation: Succeeding Against All Odds
If there is one product/service that has played a vital role in making Apple worth $1 trillion, it’s iPhone. In the fiscal Q3 2018, ended on June 30, over half (56%) of Apple’s revenue was registered by the sales of iPhones. However, for the last few quarters, Apple has been facing immense criticism for the exorbitant pricing strategy of the latest model iPhone X.
The much-criticized iPhone X is doing decent sales but fell short of the company’s desired figures. In fact, the sales of the old iPhone models have increased significantly since the launch of iPhone X. Despite that, the iPhone X alone accounted for almost 27% of Apple’s overall revenue in the fiscal Q2 2018.
Apple also manages to gain a significant amount of revenue from tech and items other than the iPhones. These product lineups include the iPad, the Mac, Smartwatch, other wearables, Music subscription, services etc. All of that account for the rest of the revenue shares.
The increasing revenue and profit year-over-year have helped Apple to secure its numero-uno position by the valuation for long. Despite the lukewarm response from the market, the company posted a record third-quarter revenue of $53.3 billion in fiscal Q3 2018.
Apple has managed to win the rat race that had been going around among the top media and tech giants, such as Amazon, Microsoft, Google etc. to touch the one trillion dollar mark. However, the upcoming fiscal quarters’ results are going to be crucial as it would decide if victory and success are going to be temporary.