Apple is the only public company with a market cap above 1T right now. There are several other stock that has the potential to be in the 1T club, include GOOG, AMZN and MSFT, or even Berkshire Hathaway.
Although it is exciting to see a few companies in the 1T club, the one not so welcome and difficult question is, will AAPL be able to sustain its position in 1T market cap? Well, there are reasons investor should be at alarm.
First of all, Apple is not the only one 1T company in the stock history. PetroChina Company Limited (PTR) surpassed 1T on 2007 and Warren Buffet's Berkshire was a big stock holder of PTR at the time (about 3%). Buffet sold the entire stack by Oct. 18, 2007. PTR reached all time high around that time with about $260 per share. The stock price crashed soon after, went all the way down $74 a year later, and ever since in between $60-$150 range, currently around $80. Although the oil price fluctuation was supposed to be the major factor, it is in fact not. Brent oil topped out at about $144 a barrel in July 2008, and at the same time PTR has the stock price in half of its peak when the oil price was at about $90. The major factor that influenced the PTR stock price is indeed the news Buffet acquired / sold the stock. By then Buffet invested about 500M and profited about 3.5B.
Second of all, what's the major forces that is driving Apple's stock price? One is the huge stock buy back with hundreds of billions. $200B was done by June, 2018, and another $100B was announced. As of June, 2018, Buffet's Berkshire Hathaway owned approximately 246.5 million shares, or 5.1% of Apple's outstanding shares. With today's apple stock price of 222, this stack worth about $54B. It's a big stack but not as big as Apple's stock buy back plan. Even so, with Buffet's Berkshire name on the top stock holder list, many investors will be over optimistic and buy buy buy. The question is when will Buffet unload the pile, and when will Apple diminish its buy back plan? Looking at Apple's recent buy back data statistics, there is a trend of slowing buyback but it is still around $5B a quarter. As soon as consumers willing to pay high price for an IPhone, Apple will have enough cash to sustain the buy back plan. With the trade war between USA and China dragging on, it is likely that either the higher price of Apple's product discourage it's demand or Apple has to suffer lower margin.
We will see in a year, and what's your thoughts?