Call (NASDAQ: AAPL) made headlines this week for becoming the first U.S. company to reach a $ 2 trillion market cap. That in itself is a confusing milestone, but even more so if you zoom out and realize that Apple shares have more than doubled from the lows of March – Apple has added $ 1 trillion to its total valuation in just a few months.
Here’s the thing: Apple’s market cap may not have really been up to that historic threshold.
Image Source: Apple.
The price threshold may be higher
There is a natural lag associated with many market events due to the timing of registrations. In the case of Apple it turned out that the last submission of the quarter was just on July 17.28 billion shares. Since July 17th. Since a company’s market cap is simply calculated as its share price multiplied by total shares issued, that translates into a price threshold of $ 467.77 for Apple should be worth $ 2 trillion – which the stock traded above yesterday.
But that share count was from more than a month ago, and Apple has aggressively taken over its shares for years to hand over fists. While some companies may use buyback programs to simply swap out of stock compensation expiration, the large scale of Apple’s repurchase program – the Cupertino tech giant has bought $ 360 billion in inventories over the past eight years – has resulted in a slow reduction in shares excellent.
AAPL shares Striking Data through YCharts
We do not know how many shares Apple undoubtedly bought last month. Does the company have yet to launch an Accelerated Share (ASR) program? Probably not, since last quarter started with a fresh $ 6 billion ASR. Has the company already committed to the $ 5.5 billion in debt it raised last week for open market purchases? Maybe; Apple has historically financed its purchases with debt, although the tax reform in 2017 changed the calculation for corporate finance there.
For context investors know that Apple had a little over 4.31 billion shares as of June 27 (its last balance sheet date). This shows that Apple bought about 37 million shares in about 3 weeks. The point is that no one outside of Apple knows how much stock the company has bought back, but the price threshold for a $ 2 trillion market cap is a moving target. It will change superficially again when the Mac maker’s 4-for-1 stock split goes into effect later this month.
Apple has shown that its rising share price rarely distracts him from taking over the repurchase activity, as management has long expressed confidence that the stock is undervalued. Trading at about 35 times earnings, it is hard to argue that Apple shares are expensive.
