March 7, 2012

Apple iPad 3 and the $500B Market Cap

Apple iPad 3 and the $500B Market Cap.

For a $500B market cap, Apple share price has to be $537.54 or greater.

Apple’s market cap crossed $500B briefly last week. This week is it hovering just below $500B waiting for the iPad 3 launch.

ETFGuide wonders if entering the $500B club is a curse and if Apple shares will now start falling? 
Apple is the sixth company to enter the exclusive $500 billion market cap club and many analysts (I'm not one of them) expect it to be the first company to reach the $1 trillion mark. The five previous companies were Microsoft, GE, Cisco, Intel and Exxon.

Microsoft, GE, Cisco and Intel recorded their valuation top tick between July 1999 and September2000; Exxon in July 2007. The March 4, ETF Profit Strategy Newsletter warned that neither timeframe was a good buying opportunity. In fact, every stock was 'kicked out of the club' shortly after entering and broader markets like the Dow Jones (DJI: ^DJI - News),S&P (SNP: ^GSPC - News), and particularly the Nasdaq (Nasdaq: ^IXIC - News) cratered thereafter.
How Apple is different from the previous members of the $500B club – none of them had the tremendous earnings momentum and growth that Apple enjoys today (Apple’s last quarter net income was $13 B).

ETFGuide also comments on the iPad 3 introduction. 
We are also mindful of Apple's announcement to unveil the iPad 3 this week. Shares rose 1.84% on the news (last week). When Apple introduced the iPad 2 last year, the stock also rose 2% following the announcement, peaked the next day and entered a six-month correction.
Apple’s shares may very well fall (for some time) after today’s introduction of iPad 3, but, Apple market cap is likely to come back quickly and grow north of $500B. The iPad 3, iPhone 5 and potentially a new product line this year will help make this happen.

Tags: apple market cap $500B, curse of $500B market cap, apple ipad3 market cap