Apple Hits $1 Trillion To Become First Trillion Dollar Company; But It’s Still Not The Most Valuable Company In The World

Today, Apple (AAPL) became the first $1 trillion public U.S. company. Its stock jumped 2.8 percent to $207.05 (as of 9:15 a.m. Pacific), taking its gain to 9 percent since this Tuesday, when it released its latest quarterly earnings. Apple management reported higher than expected quarterly results, and mentioned that it bought back $20 billion of its own shares.

But in spite of all of the press coverage around this major milestone, Apple is not even the most valuable company in the world. That distinction belongs to fellow tech giant Amazon. How can that be, when Amazon’s market capitalization is only a ‘meager’ 887 billion? The key lies in the metric used to measure a company’s value.

Most analysts use “Enterprise Value” rather than market capitalization to measure a company’s value because it accounts for the total operating value of the firm and adjusts for the capital structure of the firm (with equity, debt, and cash). A large part of Apple’s equity value is in the hoard of cash on its balance sheet, which doesn’t reflect the ongoing value of the company. They could use that cash to issue a dividend or buyback shares, but it wouldn’t change how much the actual company is worth based on its potential future profits. In fact, Apple typically buys back shares every quarter.

Amazon passed Apple in enterprise value back in June during its meteoric rise and is now worth $80B more than Apple. Amazon and Apple are just two of the tech giants (dare we say “conglomerates”) that now make up the most valuable companies in the world. We took a closer look at the rest of the tech giants and plotted their enterprise values over time using Sentieo’s Plotter tool.

 

Tech Giants Enterprise Value

Sentieo

Interactive Chart: http://snt.io/c8B2JRXn2

Looking at the chart, we can see that Apple (black line) and Google (red line) had been leading the pack since 2016. However, around February of this year, Amazon surpassed them both to become the most valuable, and after some back and forth, broke away at the beginning of June.

Facebook (blue line) and Netflix (purple line), while also members of the “FANG” group, actually have much lower enterprise value that Amazon and Apple.

 

Regardless of Enterprise Value or Market Cap, Tech Is Taking Over

The more important thing to note is that these tech giants are taking the stage as the world’s most valuable companies, both in enterprise value and market cap. In July, CNBC reported that the majority of the returns this year on the S&P 500 index have from tech giants. The tech companies in the table below are responsible for 99 percent of the S&P 500 returns this year, meaning the rest of the S&P remained almost flat. (Data as of July 10, 2018)

This hasn’t been the case since the last dot-com boom in the 1990s, when Cisco was anticipated to become the first trillion dollar company. We plotted a few tech and oil companies to look at how market leadership has changed over the past 10 years.

The large grey spike in 2008 represents PetroChina’s peak market cap.

In 2006, Microsoft (blue line) had the fourth largest market cap but was still eclipsed by Exxon (orange), GE (black), and PetroChina (gray) — and closely followed by Total (teal).

In 2011, Apple (red) came in third place to Exxon and PetroChina.

But in 2016, Apple (red), and Microsoft (blue), Amazon (purple) and Facebook (green) all took the top 4 highest market cap spots, dissimilar to the situation today.

 

Market Cap: Tech vs. Oil 

Interactive Chart: http://snt.io/aHB2JPRNV

Based on their monstrous market share, we anticipate that the tech giants will rule for a while — unless another unexpected dot-com crash occurs.

Auto Insurance Voices Caution As Self-Driving Cars Near

We analyzed over 9 million financial documents, covering more than 10,000 companies across the globe, for mentions of the self-driving car theme. We found that interest in self-driving cars has grown 8.5x in the past two years, but suspect that there is much more interest to come. Predictably, car and technology vendors were earliest in bracing for the technology’s impact, but the insurance industry is now beginning to take the threat seriously.

tesla self driving

Self-driving cars are approaching quickly. Google unveiled its self-driving project just four years ago, while Tesla shipped the first car with its famous auto-pilot feature just one year ago. Though impressive progress has been made, much more is needed before self-driving cars reach scale. In the meantime, there have been setbacks. Last May, the first person was killed in a car operating on auto-pilot, while Uber ended its San Francisco self-driving project after a week amid permit conflicts with the DMV, along with several sightings of its cars running red lights. (The project continues in Arizona.) Despite the inevitable bumps along the way, self-driving cars—also known as “autonomous vehicles”—will almost certainly become a reality within the next two decades, and their impact will be felt massively across the transportation and logistics industries, among others. Read More

Using Google Chrome: Some Tips And Tricks For Equity Analysts

Google’s web browser can save you time by loading web pages faster (sometimes 10X faster) than other browsers.  Here are some ways in which Chrome can save you even more time:

  • Add bookmarks to the Bookmarks bar that appears when you open a new tab.
  • Add shortcuts to Chrome’s address bar, letting you access websites with fewer keystrokes.
  • Re-open closed tabs with Crtl + Shift + T.

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Technical Thoughts: Sentieo’s Alexa Skill and the Three Fundamental Laws of Voice User Experience $AMZN $GOOGL $AAPL

Sentieo’s Alexa Skill is live! We present some thoughts from our technical team recapping our experiences for the benefit of those who are keen on considering the future of computer interfaces.

For Voice User Interfaces (VUIs) to have any chance of success, the future direction of Voice User Experience (VUX) will be strongly tied to physical, not software, constraints.

The three features of these will be:

1) At least 100 words per minute (wpm) input

2) close to 200wpm output

3) under 250ms response time.

We are nowhere close.

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$GOOGL Trips Goes Native: When will $AMZN buy $TRIP?

We have spent the past day playing around with the new Google Trips native app. Reviews have been effusive, with titles like “killer travel app” (The Verge) and “a free, full-time travel guide” (TechRadar). The user interface is a breath of fresh air and matches the clean aesthetic we’ve come to know and love from Google, but it doesn’t make us run out and short TripAdvisor right away. Unlike the Chinese OTA sector, where the two industry leaders $QUNR and $CTRP literally threw billions at each other before finally making peace, the Western “TripAdvice” industry is bifurcating and this is the reason why $GOOGL and $TRIP will coexist peacefully in the medium term. In the long term, $TRIP will probably not exist as an independent entity. We explore why it could be worth more to $AMZN instead.

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$YELP needs Help: Why Jeremy Stoppelman Is Yelping about $GOOGL Before Earnings

Last week, $YELP CEO Jeremy Stoppelman was literally “yelping” for help:

 

Google systematically downranking sites is not a new phenomenon; SEO-centric companies like RetailMeNot ($SALE) have been suffering this for two years now. However, downranking competing services and promoting your own is much more of a legal and moral grey area, as Microsoft ($MSFT) found out in Europe. The stock market will rule before the courts do – and we think this is going to be extremely material for the quarter as we have been tracking a sustained deceleration in organic search engine interest on our Mosaic product:

yelp4

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Bears Be Warned, Pandora $P Quite Literally Bought The Quarter

We are huge fans of Tim Westergren, who wrote the textbook on scrappy startups having founded and led Pandora through the tech implosion of the early 2000s. Doing everything to keep Pandora alive, from convincing employees to defer salaries, to maxing out personal credit cards, Tim’s vision of a Music Genome Project (US Patent 7,003,515) ultimately proved immensely valuable. But that was a decade ago.

p11

Since then, huge competitors from adjacencies like Apple ($AAPL) and Youtube ($GOOGL), well funded entrants like Amazon ($AMZN), to startups like Spotify and Tidal, have waded into the space with new technology. Spotify today was the subject of fresh discussions around an $8bn IPO while Pandora languishes at a $3bn market cap. A combination of 1) a subscription-based business model, 2) on-demand listening and 3) curated discovery has proven extremely successful and has presented a serious threat to Pandora’s lean-back, low ad load, passive listening model.

Tim has returned to rescue Pandora once again. Pandora’s pivot is 6 years too late, but late is better than never, and they are now pulling out all the stops. In this post, we show:

  • How the Street has gotten Pandora’s modeling so very wrong – and is still doing it!
  • How Pandora is ex growth in users and in technology
  • How to track Pandora on operator metrics using our Mosaic product and ask the right questions
  • How to import custom data sets into our Plotter and answer those questions

Put your favorite playlist on, and let’s begin!

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