Apple’s journey to reaching a market cap of $2 trillion has been anything but smooth. After the passing of Steve Jobs in 2011, many investors were unsure if his successor, Tim Cook, would be able to lead the company to the same level of success. There were even doubts if Cook would be able to sustain the level of success that the company had already achieved. But despite various challenges such as lawsuits, regulatory investigations, and a trade war, Apple’s shares continued to soar.
The first Apple II home computer was launched in 1977, changing the world of technology forever. To understand how Apple became the world’s most valuable company, one must start with the milestone reached in August 2018. This was the first time Apple reached a market cap of $1 trillion, surpassing other tech giants by billions of dollars. Today, Apple is worth as much as the four largest US banks combined. If you had invested $10,000 in Apple back in 1980, you would be a millionaire today.
The company was coming off a strong year in 2018 after some stumbles in 2016. There were concerns about Tim Cook’s leadership and the company’s prospects in the China market. However, things started to turn around in 2017 and by 2018, it was clear that the company was back on track. The release of the iPhone X fueled a stock surge that continued to rise until it reached the $1 trillion milestone.
iPhone missed expectations
Apple Inc. was riding high in July 2018 when it reported its best third quarter yet. Its flagship iPhones were still widely popular and sales from the app store and other services had hit all-time highs. However, a month later, the company released its most expensive iPhone model yet and the future was looking uncertain. Despite the confidence in the new suite of iPhones, Apple announced in January 2019 that it had missed its expectation for iPhone sales. This was partly due to the ongoing trade war between the US and China, which resulted in a sharp fall in purchases of iPhones in China.
Many people were not fully convinced by the new features and questioned whether it was worth spending so much money on. In response, Apple slashed its quarterly revenue forecast for the first time in over 15 years and the company lost more than $400 billion in market value since the financial crisis. This fall from grace only confirmed the doubts of some skeptics who were questioning whether Tim Cook could successfully lead the company. However, in March 2019, Cook took a bold step and expanded the company’s strategy that it started in 2017. He was determined to turn things around and make Apple a successful company once again. Despite the challenges, Cook remained confident that Apple would come out on top. With its focus on innovation, high-quality products, and a strong brand.
Apple then announced several new services and products during a special event in Cupertino, California. This move was part of the company’s transformation from being solely focused on gadgets to also focusing on services and finance. The announcement included the Apple credit card, Apple TV plus, and a number of new gaming and financial services.
As the press continued to circulate around the event, Apple’s stock price continued to rise, indicating that the company’s big bet on services is starting to pay off. In the spring of 2019, the US-China trade war was causing concern for Apple as there was a possibility of iPhones and other gadgets becoming more expensive for US consumers due to tariffs imposed by President Donald Trump.
For years, Trump had been pressuring Apple to move more of its production to the US, but this was not feasible for the company on a mass scale. At the time, they were even planning to move production of the Mac desktop computer, their only product still manufactured in the US, to China. However, Tim Cook was able to navigate around the tariffs and prevent any significant damage to Apple.
With key products, such as iPhones, exempted from sanctions, Apple stock continued to gain momentum but amid a surge of growth, Apple’s new focus on services brought scrutiny from federal regulators. In the US, the company faced antitrust probes related to its app store, where many of the services are based but this didn’t seem to faze investors. Over the course of the year, Apple bought back around $80 billion worth of its own shares, further juicing the stock price. And by January 3rd, the company’s share price had more than doubled from the year before.
Apple’s resilience during the pandemic
The future of Apple seemed bright until the pandemic hit. The coronavirus pandemic affected Apple’s manufacturing hubs in China and caused many investors to worry. Apple was particularly vulnerable due to its ties to China, and its contract manufacturers were forced to temporarily close their factories to deal with the pandemic’s impact. However, Apple’s stock quickly bounced back. The US government’s massive stimulus plan lifted the markets and helped to boost stocks, including Apple. With people staying at home and relying on technology to work and learn, the demand for technology increased. People were using computers, tablets, and smartphones to work and entertain themselves, leading to an increase in app downloads, TV programming, and music streaming.
On July 30th, Apple released its earnings report and announced an impressive 11% increase in revenue. The company credited this growth to several factors such as the strong launch of the iPhone SE and the ongoing economic stimulus. This news was well received by investors, causing Apple shares to skyrocket. In fact, on August 19th, the company achieved a historic milestone of reaching a $2 trillion market cap and becoming the most valuable publicly traded company in the world.
However, despite this success, Apple still faces numerous challenges in the future. The company is currently facing regulatory issues and antitrust investigations in both the US and Europe and has received criticism from other companies regarding its business practices. While few people would doubt Apple’s ability to succeed, there is no guarantee that its stock will continue to rise.
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