Apple is the most valuable public company ever. But how much of a record is that?

  • By Jeff Sommer and Karl Russell,
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Apple’s (AAPL) rising stock price briefly pushed its market value over $900 billion last month. That made Apple the most valuable publicly-traded company of all time, raising the question: Will it become the first company to be worth $1 trillion?

We asked experts at the University of Chicago to help make sense of Apple’s enormous size, given the long history of the stock market. Apple’s numbers are still spectacular — but they don’t look as awesome when you take a long-term view.

On Nov. 8, Apple’s closing market cap reached $903 billion, surpassing what Microsoft (MSFT) was worth during the dot-com boom. Microsoft’s highest closing value in 1999, when translated into today’s dollars, was roughly $901 billion.

Apple’s value has been rising for quite some time. Earlier in this decade, Apple passed Exxon Mobil (XOM) as the most valuable company in the contemporary stock market.

To put its current size in context, Apple is worth more than the entire G.D.P. of Turkey.

But Apple’s dominance is not just a question of inflation. Using another metric — Apple’s weight in the current stock market — IBM (IBM) and AT&T (T), in their halcyon days, were far more dominant than Apple is today.

The University of Chicago maintains a database with virtually all companies traded publicly in the United States since December 1925. Alexander Poukchanski, assistant director of index analytics at the Center for Research in Security Prices at the Chicago Booth School of Business, used that data to create a list of the 20 top American companies, ranked by their highest market cap, from 1925 through November.

No surprise: When the numbers are not adjusted for inflation, Apple is the largest company on the list by a large margin, followed by Alphabet (GOOG) (the parent company of Google) and Microsoft. In this list, all three hit their high point in November. Apple has been moving above and below its pinnacle since then, and its value was just above $895 billion at the close of trading Wednesday.

The list is basically split between the hot markets of the last 25 years: the current one, which started in March 2009, and the stock market surge associated with the dot-com era and its aftermath. General Electric (GE) was in fourth place over all, based on its $594 billion market cap in August 2000. Companies like Intel (INTC), Cisco (CSCO) and Oracle (ORCL) appear on the all-time list, too.

Intriguingly, AT&T made the list twice — once, in March 2000, and a second time, in July 2016. That is because the University of Chicago says the “old” AT&T went out of existence in November 2005. AT&T was split into many pieces. The new AT&T was formed after SBC, a regional telephone company, bought the old AT&T name.

When you adjust for inflation, the ranking changes.

Apple’s margin in first place is dramatically reduced.

In December 1999, Microsoft’s market cap was $647 billion. That would have been enough to place it in third place, without taking inflation into account.

But over extended periods, the compounding effects of inflation are powerful. That $647 billion translates into a nearly 40 percent increase in value in November 2017 dollars. It has probably gained slightly more since November, because inflation has remained positive.

General Electric has been shrinking lately as it restructures. But in inflation-adjusted terms, its August 2000 market cap is still growing and it moved up one spot on the list, to third place. Cisco and Intel moved into fourth and fifth place, based on their soaring shares during the dot-com boom.

Even more than the first list, the inflation-adjusted ranking provides a reminder of the stock market highs during these two exuberant periods — the dot-com era in 1999 and 2000, and the bull market that is still underway.

Seven of the all-time biggest companies reached their peaks in October or November, the most current data in this ranking, and 12 of the companies did so from late 1999 to early 2001.

Exxon Mobil is the only company to have achieved a top-20 market cap unaided by the momentum of one of these rising stock market eras. In inflation-adjusted terms, Exxon’s peak occurred in July 2007, several months before its pinnacle in nominal 2007 dollars.

Another way of measuring a company’s stature in the stock market is to see how big it is relative to the market as a whole. Using this metric, Apple in late 2017 does not tower over the rest of the stock market as much as many other companies did in previous eras.

In fact, although Apple’s market cap is far higher today than it was five years ago, Apple shares represented a larger share of the total stock market in September 2012 than they do now.

The Apple of 2017 does not show up at all in either of the two Top 20 lists that Mr. Poukchanski produced, one starting in 1980 and one going all the way back to 1925.

It may be difficult to remember but, as we’ve written, IBM had far more stock market swagger in the 1980s than Apple does today.

In December 1985, IBM’s shares constituted 4.4 percent of the entire stock market, a higher percentage than any other company since 1980.

That is a very high figure, given the enormous expanse of the universe covered by the Center for Research database, which included 6,225 stocks for December 1985. (By contrast, the Standard & Poor’s 500-stock index (.SPX) has, as you might imagine, 500 stocks; the Dow Jones industrial average (.DJI) has 30.)

In November, Apple’s shares constituted only 2.5 percent of the overall stock market. In September 2012, they reached 3.2 percent of the total market, far more than today.

In other words, many other stocks have become giants in the 2017 market: Alphabet, Microsoft, Amazon, Berkshire Hathaway (BRK/B), Facebook and more. Apple does not tower over them as much as IBM once did over its contemporaries.

With an even longer perspective, Apple’s current stature diminishes further.

Consider that in May 1932, AT&T constituted 13 percent of the entire stock market — more than five times higher than Apple’s proportion today. In March 1928, General Motors (GM) accounted for 8 percent of the stock market. And in 1970, IBM accounted for 6.8 percent of the market of that day.

One explanation for the outsize status of these companies in earlier times is that the stock market itself was much smaller: 6,715 listings in November compared with only 704 in May 1932 and 584 in March 1928. It was easier to be a big fish in those smaller ponds.

That said, at the end of 1985, when IBM’s market cap was far larger than any other company’s, there were 6,225 publicly traded stocks in the market, nearly as many as today. So the size of the stock market isn’t a sufficient explanation: Companies like IBM and AT&T simply were more dominant than Apple is now.

For example, the old AT&T was so big that Standard & Poor’s excluded it from a predecessor to the S&P 500 stock index “because S&P did not want to let the performance of such a large firm dominate the index,” as Jeremy Siegel, a finance professor at the University of Pennsylvania, wrote in his book, “Stocks for the Long Run.”

Considered a monopoly, the old AT&T was forcibly broken up in 1984. (A descendent of the company is embroiled in antitrust issues of its own, arising from its proposed merger with Time Warner (TWX)).

Some formerly colossal companies are no longer stock market powerhouses. For example, U.G.I. (UGI), now a modest-sized utility company in Pennsylvania, accounted for 2.6 percent of the entire stock market in December 1932. In those days, the firm says on its website, U.G.I. was a holding company for scores of gas and electric companies, plus major engineering firms.

But a 1935 law during President Roosevelt’s administration called for the abolition of such holding companies. After a lengthy court fight, U.G.I. transformed itself into a much smaller entity. On the list of the most dominant companies, it is an artifact of a bygone era.

It is possible that 80 or 90 years from now, journalists and historians will puzzle over Apple’s once titanic stature, too. Why did the iPhone become so important — and why was it so immensely profitable for investors back in the early days of the 21st century?

These questions may seem strange today, and those who are so inclined may celebrate as Apple sets new stock market records. But it is worth recalling that other companies played monumental roles in the stock market, until their day was done.

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