Apple (NASDAQ: AAPL) Now Officially Worth More Than the GDP of 187 Individual Countries
Apple shares have been incessantly traversing an upward ramp since hitting the year-to-date low of $224.37 on the 23rd of March. As a result of this 100 percent plus rally, the iconic iPhone maker’s stock surpassed the threshold price level of $467.76 just moments ago, culminating in a market capitalization of $2.0 trillion. The stock is currently trading at $467.72.
Interestingly, if Apple were a country, it would be classified as the 9th richest one. This comparison assumes an equivalence between market capitalization and the GDP metric.
(All GDP figures are in trillions of dollars and sourced from here)
As illustrated in the chart above, at a hypothetical ninth place among the global grouping of 195 countries, Apple would supersede the GDP of 187 individual countries!
Two factors have played an important role in spurring Apple toward its $2 trillion valuation. First, the stock market trades on expectations of future growth and Apple seems poised to hit a jackpot with the imminent launch of 5G-enabled iPhones. Analysts have long expected this development to unleash an upgrade supercycle, thereby, providing ample room for top-line growth. Second, despite the ongoing ravaging effects of the coronavirus (COVID-19) pandemic, the company managed to increase its Q3 2020 revenue by 11 percent on an annual basis. This achievement serves to highlight the demand resilience for Apple’s product line-up.
Nonetheless, the ongoing rally in Apple shares does carry a material risk. As an illustration, Bank of America analyst, Wamsi Mohan, downgraded Apple from a ‘Buy’ to a ‘Neutral’ rating on the 5th of August. Mohan noted that the stock has undergone significant multiple expansion recently without a corresponding change in 2021 estimates. According to the analyst, this paradigm has created a risk/reward imbalance given that the stock is currently trading at stretched valuations, corresponding to the highest premium to the S&P 500 index in over 10 years.
Of course, this milestone comes at the heels of a somewhat dramatic episode recently. Irked by the 30 percent commission charged by Apple on all App Store sales, Epic Games introduced a direct payment mode in its wildly popular Fortnite game on the 13th of August. This prompted Apple to remove Fortnite from its App Store for violating its explicit terms and conditions. However, it appears that Epic was anticipating this move by Apple. Within moments, the gaming company filed a lawsuit against the iPhone maker and launched an active social media campaign against the supposedly monopolistic nature of Apple’s App Store usage terms. Given the stakes involved, this lawsuit by Epic Games has the potential of upending the prevailing App Store regime and catalyzing a material impact on the segment’s finances.