Why is it important a consideration? A standalone per-share price can tell us little about a company. Its market cap (per-share price times shares outstanding), however, places a company in context, helping us compare companies across the industry.
Large caps have been a subject of dispute among investors, analysts and company executives for quite a long. The main consideration is who will be the first to cross the $1trillion market cap line? Here’re the key contenders.
It’s hardly surprising that the company has been the global leader by market capitalisation for six years in a row. Apple stock price history tells that the company’s value was boosted by 25% in 2017 compared with the previous year. The iPhone producer won Warren Buffett’s approval as well. The investor assumes Apple will become a trillion-dollar company before his Berkshire Hathaway, worth $425.03 billion as of July 2017. As a result, Buffett’s holding purchased Apple's stock worth billions of dollars.
The company's is about to release its iPhone 8, and bullish investors bet this will push Apple forward to reach the 13-figure valuation. However, it needs to make an effort to get the extra 33%.
Google’s parent company is rated second among the largest companies by market cap. Being the main Apple’s contender, Alphabet has clearly fallen behind in 2017. It was only in February 2016 when Alphabet brought down its rival for the first time. Also, Apple paid as much as $29 billion in dividends in 2016, whereas Alphabet handed investors back only $4 billion.
The company’s stock needs another 60% to reach $1 trillion. Compared with 2016, the market cap has changed by 12%, more than half the Apple’s increase.
The producer of staples in the personal computing industry is another tech company that leads the rating. By the way, technology is the largest sector in terms of market capitalisation, outperforming the financial and consumer goods sectors.
Microsoft is in the top 3 companies, which haven’t changed compared with 2016. Meanwhile, the company’s stock has to rise 89% to reach a 13-figure level valuation.
In 2016, Amazon pleased investors immensely showing a confident three-fold increase in profits and a rise in sales by 27% as compared to the previous year. The company’s strong performance is reflected in today’s market cap – over 50% change against 2016.
If Amazon’s share price grew at the same pace, it would reach $1 trillion market cap in just two years. But the analysts at Barclays predict the company will succeed in doing so at the end of 2027. For now Amazon needs a 121% boost.
The social networking giant is the fifth largest company by market cap. A 132% rise in the share price is needed to win the crown. The recent performance of the stock shows Facebook is a strong competitor in the race: the company experienced a 26% change in the market cap against its 2016 value.
What does it all mean?
Although the front-runners have a strong hand, the challengers are breathing down their neck. It’s quite hard a task to determine who’ll win the crown, but investors who predict it correctly could be generously rewarded.