Apple is worth a trillion dollars, but nobody knows for how long

Apple is worth a trillion dollars but nobody knows for how long
Apple is worth a trillion dollars but nobody knows for how long

The stock price of Apple has reached record highs, reaching over one trillion dollars, one trillion for the Anglo-Saxons. However, to the logical optimism we must put a but: for the functioning of the market, this figure may not last long.

The value of a company like Apple on the stock market depends on the price of its shares, that is, what investors are willing to pay to own a bit of the company. Obviously, the better the economic results, the greater will be the demand for shares, the higher the unit price and the higher the total price, but this is not always the case.

Lately Apple’s numbers have been pretty good, and that’s partly why it has reached a trillion dollars, but for how long? What is real about the stock price? As it is a fluctuating value, today it can be a trillion and tomorrow 500,000 million, half.

The value of Apple will depend and much of its results

It is not a static price, nor is it the price of the rest of the listed companies. All investors know this, and that is why they buy shares of companies with good results, in order to sell them for more than they cost them. That generates even more demand and higher price, a classic bubble.

Currently there are many technology companies, even small startups, whose value rises like foam. It is a fact slightly similar to what happened during the dotcom bubble back in the year 2000.

Obviously, that Apple is the company that has more value on the stock market has much merit, it outweighs Google, Facebook and other technological giants. However, do not get carried away by optimism.

The future value of the company’s shares will depend on the economic results that it presents. Although this may seem obvious, it is well known that investors tend to overreact to these results, whether good or bad.

What does this mean? That if next year Apple presents bad results, with less iPhone sold -for example- you can leave half of your market capitalization in a single day, and nothing happens.
Apple wireless charger
Why a trillion dollars of capitalization does not translate into a trillion dollars in constant cash

Giving a spin to this news, if the value of the shares of a company depends on supply and demand, presumably it is impossible to convert its stock market capitalization into “cash”.

As an example shows: if tomorrow go on sale 100,000 million in shares of Apple, the price of them would collapse immediately.

It is the same reason why the fortune of the great millionaires does not have to be taken literally, because a good part of it depends on the price of shares of companies that are mostly theirs.

Jeff Bezos has a lot of money, no doubt, but part of his capital consists of Amazon shares that he can not sell, or that he can not sell at the price they currently have, as it would generate an excess supply and an immediate drop in prices.

What do you think?

Written by Geekybar

Linguist-translator by education. I have been working in the field of advertising journalism for over 10 years.

For over 7 years in journalism. Half of them are as editor. My weakness is doing mini-investigations on new topics.


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