A Short Course in Why Apple is worth roughly a trillion bucks

A Short Course in Why Apple is supposedly worth a trillion bucks.

By the editor

In my past life, I studied a semester’s worth of macro and micro-economics each. I also studied a lot of accounting. That is why I feel competent to state why Apple is valued at a trillion dollars.

First of all, it is not Apple’s physical assets that are worth all that dough. As fancy as their new headquarters is, it is not worth a trillion dollars, along with all the Apple stores. It is not all the machinery that goes into manufacturing Apple’s products. I don’t know what Foxconn values its machine inventory at, but I am sure it’s not a trillion dollars.

What, then, does Apple own that is worth a trillion dollars?! Nothing. It is what the stockholders of Apple would pay today for the shares of Apple. 

If they bought them in 1997, those shares have increased in value many times over. Just like the value of my condo has increased. It’s not what I have done to my condo that makes it more valuable. What people would pay for it today makes it more valuable. 

We should remember that 21 years ago, Apple flailed in all directions like a turtle on its back. Steve Jobs managed to right the turtle to set it on the path to commercial glory. 

 

What if Apple flails again like a turtle on its back in 21 years again? Stay tuned…

Tom Briant

Editor, MacValley Blog