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Apple world's most valuable company ever – but not if you allow for inflation

Talk about a tale of two techs. Apple shares hit a world record high today, while Groupon crashed to a new low amid fears the daily deal business model is broken beyond repair (a notion that local daily deal hero Shane Bradley rejects).

Apple shares have been trading for as high as $US664.74, giving it a maket value of $US623.14 billion. The world's second most valuable company, Exxon Mobil, is now some distance back on $US408 billion.

That makes Apple the most valuable company ever, accordiing to S&P data.

At least if you don't allow for inflation.

In 1999, at the height of the tech boom, Microsoft's market cap hit of $US630.58 billion.

According to a US government inflation calculator, that translates to $US850 billion in today's dollars (today, Microsoft's market cap is $US259.05 billion. Apple has passed Microsoft in the trendiness stakes. But in fact the market cap difference doesn't have anything to do with the relative sexiness of the two companies; Microsoft shares are trading at a price-to-earnings multiple of 15.5, Apple at 15.2 on the back of its trailing 12-month profits of $US40.13 billion).

Apple three-year share performance/market cap (source: S&P Capital IQ; click to zoom).

Apple shares have to hit $US908 before it equals Microsoft's inflation-adjusted record.

Its effort will get a boost later this year with rumoured released including a mini version of the iPad, the iPhone 5 and some kind of TV (Apple never comments on future products).

If you're curious about how Apple compares to local tech stock hero Xero – we can't compare on P/E since Xero doesn't have any earnings at this point.

But in terms of money coming in through the door, Apple is trading at a multiple of 3.9 to revenue; Xero at 26.1 (source: S&P Capital IQ).

Of course, unlike Xero, Apple has grown to the point where it is not about to double or triple in size in quick time, and it's too big for anyone to buy it...

More by Chris Keall

Comments and questions
1

For Xero to match Apple's P/E of 15.2 it would need annual profit of around $33 million. That's still more than its annual turnover and a big turnaround from its loss of around $8 million in the past year and its accumulated losses of around $35 million.

I understand its business model and what it is trying to achieve. But Xero still seems massively over-valued to me.