Last week Apple Inc. crossed the $1T mark in terms of value! Unless you live in a cave you couldn’t avoid the news but here’s what it means:
Ain’t capitalism great! Apple stock hit a new high today, up a whopping $12! It now has the second highest market cap in the world.
Market Cap Primer: Market cap is short for market capitalization – a measurement of the value of a company. It is calculated by taking the stock price x the number of shares a company has. In very round numbers, take Apple’s stock price of over $300 x almost 1 billion shares outstanding and you get a market cap of about $300B. Not to take anything away from Apple but like many measurements, take this with a grain of salt. Why? A stock price and thus, the market cap is the market’s estimate of a company’s value based on its perceived future prospects. In the case of Apple, the stock price is increasing not only because the company’s innovative products are producing a lot of profits today but also because investors think that they will keep innovating in the future. If investors are wrong and Apple doesn’t keep it up, guess what can happen?