Apple has toppled Saudi Aramco as the world’s most valuable company after its stock hit a record high on Friday, smashing Wall Street’s expectations.
Apple stock went up $412.22 a share, to put its market capitalization at $1.762 trillion to trump Saudi Aramco’s record.
According to data from Refinitiv, Saudi Aramco has held the position of most valuable public company since last year, and had a market capitalization of $1.760 trillion as of its last close.
Analysts had expected revenue to drop 2% to $52.6 billion on average. And earnings per share of $2.58, up 18%, crushed the average forecast of $2.07. But Apple’s 11% growth put its earnings at $59.7 billion for the second quarter.
Apple along other big US tech companies has shown resilience in the face of the COVID-19 pandemic that has brought economies to staggering point, including many publicly listed companies.
Reuters reported that Apple’s filing last up 6.2% at $408.78 in midday trading, the company’s market capitalization stood at $1.748 trillion. And after it bought back $16 billion worth of shares in the June quarter, it had 4,275,634,000 outstanding shares.
Apple announced a four-four-one stock split, with a trading on a split-adjusted basis that started in August, in its quarterly report, marking its first share split since 2014.
The Q2 report of the big four; Google, Facebook, Amazon and Apple indicated that the companies enjoyed immunity as COVID-19 ravages continue.
Saudi Aramco is among the worst hit by the economic turmoil that put oil economies on severe loss. As industries shut down, the oil supply chain was disrupted that oil price plunged below $1, while tech companies witnessed a surge due to online activities.
As Apple keeps introducing new devices, investors believe it will continue to witness more gain. The release of iPhone SE in the wake of the pandemic speaks of a company that sees profit in crisis.
North American Research Director, Jeff Fieldhack said the launch of iphone SE in April helped Apple’s growth.
“Apple volumes grew through the quarter and were especially helped by iphone SE volumes… the device has been successful and selling above expectations in both postpaid and prepaid channels. Since the iPhone SE launched, carrier stores and national retail have been re-opening. Some channels saw large promos to draw shoppers back to store,” he said
Other devices such as the ipad have also witnessed great sales as people seek devices for virtual engagements.
The growth was also spurred by other services from Apple’s platform, such as Apple TV+ and Apple News, which come with monthly subscription fees. While the coronavirus necessitated lockdowns kept people at home, Apple was raking in revenue. Services from revenue jumped 15% to $13.2 billion.
Goldman analyst Rod Hall last week called the prior 2020 big gain “unsustainable” and urged investors to avoid Apple stock which he predicted would fall $299 in a year.
But the rally to an all-time high stock price came on Thursday, when Apple shares closed at $384.76 with 31% gain in the year, defying analysts’ prediction. Dell gained 15% and Hewlett Packard’s stock went off 16%. The S&P 500 Index is up just 1% on the year.
Surprisingly, the growth happened when the US smartphone market was witnessing 25% contraction, according to Counterpoint Research. Apple and Samsung switched to online stores to sustain their supply chain.
Senior analyst at Counterpoint Research, Hanish Bhata said all OEMs (original equipment manufacturer) were down in Q2, but online sales recorded a spike.
“All OEMs were down in Q2 year-over-year. Due to lockdowns, the share of online sales grew to 31% from 14% last year. However, because of strong online presence, Samsung and Apple volumes fared better than the overall market aided by a higher percentage of online sales,” he said.
Apple has been smartly engaging consumers, minding how the global health crisis affects smartphone markets. The company’s CFO Luca Maestri told analysts on a call that this year’s iphones would likely be delayed due to challenges in the supply chain.
CEO Tim Cook told analysts on call that Apple is focused on growing the pie even in time of economic adversity.
“We’re conscious of the fact that these results stand in stark relief during a time of real economic adversity. We do not have a zero sum approach to prosperity and especially in times like this we’re focused on growing the pie, making sure our success isn’t just our success,” he said.