Race to $1 Trillion

19/07/2018

$1 Trillion.

$1,000,000,000,000.

One thousand billion. One million million.

It’s a big number.

Amongst some of the biggest companies in the world, the race is on to be the first company with a market cap of $1 trillion. No company in history has ever reached this milestone before. For the new investor, the market cap is calculated by taking the number of shares on issue for a company and multiplying it by the share price. This number represents what the market has decided the company is worth.

(For example – if Equity Mates Company was split into 200 shares, and the share price was $10, then the value of Equity Mates Company would be $2000).

The four companies that are in this race, and their market caps as of Friday 15 June 2018, are as follows:

Coming in at close to equal third – Microsoft ($764.99 billion) & Alphabet  (a.k.a Google – $790.86 billion).

Second place, but rising quickly – Amazon ($823.46 billion).

First place – Apple ($927.69 billion).

While it looks like Apple has an unassailable lead, it is important to put these numbers in context. All four of these companies have shot up since 2009 as the chart below shows.

 

So who will get there first? Here’s what we think…

Alec’s pick

It’s got to be Apple. As much as I’d love to pick an outsider like Microsoft, I just can’t. Apple is returning another $100 billion to shareholders in buybacks and trading at a Price-to-Earnings of 17 (compared to Amazon’s 266, Alphabet’s 30 & Microsoft’s 28).

On June 12 (three days ago) Apple had a market cap of $945 billion. It has literally fluctuated $17 billion in 3 days.

A few more fluctuations like that and it’ll accidentally trip over the $1 trillion number. So I’m backing the odds-on favourite and taking Apple.

Bryce’s pick

I’d have to agree with Alec. My heart sits with Amazon, and I’d love to see them make history and be the first. Their growth over the last few years has been astronomical but with a lead of over $100 billion, I can’t see Apple losing from here.

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