like it’s walmart according to wikipedia
In: 17
Revenue is the amount of income a company has, not the profit. Walmart sells a lot of stuff at low profit while Apple sells less stuff but at higher profit margin.
Think about like if you sell $10,000 of product but you spent $9,500 getting that revenue, so you profit $500. Another person could sell $5000 of product but only spend $2000 getting it, so they profit $3000. Less revenue but more profit.
even if we were talking profit rather than revenue it could still be that it’s less valuable.
eg if we have a gold mine earning us £10M a year and an iron mine earning us £1M it seems like the gold mine is the most valuable but if the gold mine has 5 productive years left and the iron mine has another 300 then the iron mine is the most valuable.
Because it’s the most profitable. Company valuation is typically based on profits, not revenue. Apple has much higher margins than Wal-Mart. Also, valuation takes into account future growth in profits and the market believes Apple is more likely to find new growth than Wal-Mart.
Walmart does have more revenue. But when you buy an item, >90% of the money goes towards the running of the business and making a product. When you buy an item from Apple, only 30-50% of that money actually goes towards making the product or running the business. So revenue is not the same as profit.
Second, Apple has locked people into their ecosystem. With Walmart, everything you get from them can be found somewhere else; there’s little brand loyalty. With Apple, people get used to their phone talking to their watch and computer, so leaving the ecosystem means dealing with the annoyance of learning systems that you aren’t used to. And Apple devices don’t really play well with any other devices.
Allow me to explain to you the [Keynesian beauty contest](https://en.wikipedia.org/wiki/Keynesian_beauty_contest). The stock market is not rational, because the people participating in it are not rational, and ultimately they’re not trying to **BE** rational. They’re trying to predict what the other irrational people are doing to do, and use that prediction to profit thereby.
But even supposing the market *were* rational, the stock market is forward-looking. You don’t want to buy a stock which is valuable today, you want to buy a stock which is going to grow in value tomorrow. So, presumably the consensus is that AAPL is sitting on more future potential to make money, if the people buying it were acting rationally.
But, getting back to point one, they aren’t rational, which is why Warren Buffett says he got rich by being “fearful when others are greedy, and greedy when others are fearful”.
So for completeness, Apple likely is not the biggest company in the world, thats almost certainly Saudi Aramco, its just that how they are organized, the metrics of ‘biggest company’ (meaning by market cap) show them as less valuable in the public markets, for complex financial reasons, additionally, they are likely the most profitable company in the world
However– you can debate whether or not they are even a ‘company’ and there is good arguments they are not
Essentially it’s because Apple has managed to build an incredible brand loyalty (cult) which allows it to massively overcharge technologically illiterate people and produce obscene profits on its products. Profit is what matters for stock valuations, not revenue.
Apple is a dynamic company with a lot of future potential. People are willing to bet on that future.
Walmart is not going to have a growth pattern like Apple. They have pretty much reached market saturation.
People have mentioned profit vs. revenue, but there’s a reason why Walmart is less profitable in percentage terms. Products need to be designed, manufactured, and sold. That’s where value is generated. Apple designs and sells, and is very good at both. Walmart doesn’t design or manufacture anything, and they are selling stuff that is cheap to people who are primarily concerned with how cheap stuff is. Amazon, if you carve out AWS, also has very low margins for the same reason. Apple also has a much stronger brand than most of its competition and they sell upmarket.
Not mentioned: Apple has the most cash on hand – that is, readily available money – of any US company. In the event of a financial crisis that could wreck many companies, Apple has a massive safety net it can deploy.
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