Kris Andersen Blog | The race to $1Trillion | Talkmarkets
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Dr. Kris Andersen has been managing money for over twenty years as a private investor and portfolio manager. Combining her love of cooking with her expertise in the financial markets, Dr. Kris developed StockMarketCookBook.com, a website featuring easy to follow financial ... more

The race to $1Trillion

Date: Friday, July 20, 2018 3:41 PM EDT

In his best-selling book called "The Four: The Hidden DNA of Apple, Amazon,

Facebook, and Google", author Scott Galloway ponders the question of which of

these and other tech companies (including Microsoft) will be the first to reach the

$1 Trillion mark in terms of market capitalization. For new investors, market

capitalization (or "market cap" for short) is computed by taking the number of

outstanding shares of stock multiplied by the current price of a single share. For

example, if a company has 10,000 outstanding shares and its stock price is at

$12, then it has a market cap of 10,000 x $12 = $120,000.

 

Galloway predicts that Apple may be the winner, but his prediction was made in

late fall last year prior to publication. Let's see if his prediction is still on track.

 

Here are the current market capitalizations of the above tech names including

Microsoft:

 

AAPL $943B

AMZN $883B

MSFT $821B

FB $504B

GOOGL $359B

 

(For reference, here are the market caps of other large US companies in non-tech

sectors: JP Morgan/Chase (JPM) $379B, Exxon/Mobil (XOM) $345B, Berkshire-

Hathaway BRK.A $223B.)

 

So, it does indeed appear that Apple is still the frontrunner but Amazon and

Microsoft are nipping at its heels. Just one bad quarter or a downward revision

may be enough to put Apple's first place position in jeopardy. For Apple's market

cap to fall to that of Amazon's current market cap ($883B) means that Apple

shares would be trading at $179.5.

 

Today, Apple is trading around $191.5/share so it would only take a 6.2% move to

drop it to $179.5. That's not unrealistic at all considering its share price dropped

over 16% in the latter part of January/early February.

 

Does Apple have something to worry about? If price appreciation is any indication

(and that's a question for fundamentalists), then perhaps it does.

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