like it’s walmart according to wikipedia
In: 17
Because people purchase stocks (and therefore determine value) based on how they think the company will do tomorrow, not how well the company is doing today (though today can have indicators, but not guarantees of future performance).
Overall, investors think Apple has a bright future ahead of it.
Apple has incredibly high profit margins, a massive amount of cash, and a loyal customer base. The cash really catches investors’ interest because it means if Apple has a bad year, they’re not going to be in major trouble paying bills and developing new tech for the following year.
Economics 101
Most valuable is defined by the company’s profits.
Total Profit = Total Revenue – Total Cost
Total Revenue is just one part of the equation. You have to account for costs.
Apple has lower costs relative to revenue compared to other companies.
stocks are also based on speculation as well. so it’s not the most profitable company being worth the most.
good examples are like Amazon and Tesla. Dont know if it’s still true but they didn’t make money but their stocks kept going up because of the potential they had.
also stocks aren’t always representative of the economy. we are technically in a bad economy but the stock market hasn’t been showing that lately
Ultimately, revenue is just a means to profit which is the true value. Apple can squeeze much more profit out of every dollar of revenue than Walmart ever could.
Grocery shops have very low margins, you just buy a good, put it on a shelf, sell it. Not much premium you can ask off of that because any Ahmad down the street can provide the same service.
Apple on the other hand has their own product and a cult brand as cherry on top, their margins are way higher.
You probably spend more than $1200 on food every year. That’s the price of an iPhone 15 Pro Max. The iPhone is very profitable though while food usually is not. Think about how much it costs to gather and transport a truck full of actual apples to be sold for $1/pound. There’s almost zero profit in that business.
So imagine you have Jim and Bob.
Jim makes $100,000 a year
Bob makes $150,000
Jim’s bills cost him $50k every year and then he puts the other 50k in the bank. This is seen as revenue.
Bobs bills also cost him 50k. So naturally he should be putting 100k in the bank, right?
Wrong.
Bob takes that money and buys a new car for his business and all sorts of new assets like machines etc. it cost him 75k and he only put 25k in the bank.
The total revenue of jim is 50k. The total value of Jim is 50k
The total revenue of Bob is 25k. The total value of Bob is 100k.
There’s more nuance to it but that’s the gist. Buying assets is much more useful than just declaring profits
Theoretically you could buy 1B dollars worth of stuff and sell it for the exact same price to have a revenue of 1B dollars and 0 profit because you paid as much as you earned.
Apple is valuable because they make a lot of profit and are extremely stable.
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