Apple Inc. Becomes History’s Most Valuable Company on iPhone 5 Rumors

Fuelled by the phenomenal success of the iPad and iPhone, Apple Inc. has officially become the most valuable company in the world.

Apple Inc’s market value climbed past $623 billion on Monday, surpassing the record set by Microsoft Corp during the heyday of technology stocks in 1999. Photo: MaxVT/Flickr

Shares in Apple Inc., the technology giant which is listed on New York’s Nasdaq stock exchange, rose past $660 in early trading today taking its stock to a new height and its market capitalisation to more than $619bn (£394bn).

Apple’s stock passed the $664 mark on Monday, up over 2.4 percent, according to ABC News. Apple’s shares have risen 64 percent in 2012.

The market value of the company, which is its stock price multiplied by the number of outstanding shares, reached $622 billion in midday trading, beating out Microsoft (MSFT), the previous record-holder, which peaked on Dec. 30, 1999.

Apple is now worth about $200bn (54 percent)more than the world’s second biggest company, Exxon Mobil. The oil major is worth a mere $405bn.

“Everyone loves a winner; if you play the quick trade be careful,” said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices in emailed comments to Reuters. “If you are an investor, check the fundamentals and business plans, and avoid the hype in your decision.”

The record for the most valuable company had been held by Microsoft whose market capitalisation hit €616.3bn at the height of the dot.com bubble in December 1999, reports The Telegraph.

In inflation-adjusted dollars, Microsoft was then worth about $850 billion. The company is now worth $257 billion.

The recent rise in Apple’s stock price has been fuelled by expectation that a new version of the iPad will be launched in September.

The company’s shares usually rally in the run-up to major product launches, among the most heavily watched events on the annual tech calendar.

Analysts say that Apple’s stock has room to grow. The average price target of 38 analysts polled by FactSet is $745.80.

However, Toni Sacconaghi, analyst at Bernstein Research’s, warned that questions remain about the availability of components for both the iPhone and the iPad, which in the past has constrained Apple’s product shipments.

“A key question for the launch will be Apple’s expected rollout schedule,” Sacconaghi said on Monday. “Apple’s intention is to continue to ramp offerings as quickly as possible, but the company’s ability to do so remains a key near-term question.”

Despite the surge, Apple’s stock is not particularly expensive compared to its earnings for the last twelve months, pionts out Newser. The company’s “price-to-earnings ratio” is 15.6, compared to 16.1 for the S&P 500 overall. That suggests investors, unlike analysts, don’t believe the company can grow its profits much from current levels.

Scott Sutherland at Wedbush Morgan said that some investors sold Apple shares last summer, when iPhone sales slowed down as consumers started holding off for the new model. Those investors missed out on a 50 percent jump in the stock price.

“This time around, investors are a little bit smarter across the board … they don’t want to be caught not involved in the stock on this next iPhone launch,” Sutherland said.

Van Baker, vice president of Gartner Research, said: “All the products made under [Apple chief executive] Tim Cook’s tenure have been tweaks to existing products. One of the companies’ big successes, the iPod line, is in decline and they are going to have to replace that.”

Analysts also note that a “mini iPad,” could expand the number of people who can afford one of Apple’s tablets. The cheapest iPad cost $399, compared to $199 for the latest Google and Amazon tablets.

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