On a day of recovery in the stock market, Apple continues its march lower. Shares are down a sizable 2.6% as of Monday late morning. From its intraday peak of January 25, the worst-performing FAAMG stock of the year has declined 18%.
If shares end the day trading at $118, and assuming a diluted share count of 16.94 billion, the market value of Apple’s equity will have dipped below $2 trillion for the first time since November 2020.
Could this be yet another opportunity to buy Apple on the dip? Or might it be a sign to jump ship before it sinks?
Twitter speaks
Certainly, there is more art than science in figuring out what to do with Apple shares at the $2 trillion mark. So, I asked Twitter for its opinion.
So far, most (about two-thirds of the total votes) see the decline as an opportunity. Very few seem concerned about a more pronounced selloff, while many see $2 trillion as just a meaningless number.
Regardless of market cap, I have argued that buying Apple on weakness has historically increased the investment’s expected returns substantially. Crossing below the $2 trillion mark this time may be yet another reminder that buy-on-dip investors should pay close attention.
A look at history
Now, let’s turn to stock market history. Maybe a surprise to some, Apple was not the first company in the world to be valued at $2 trillion. The title goes to oil giant Saudi Aramco.
The company went public in December 2019, and its stock reached the $2 trillion landmark a few days later. At that time, Apple’s equity was worth only about $1.2 trillion.
Within American companies, Apple was the pioneer. The stock was the first to cross the $2 trillion valuation in the US exchange, in August 2020. Since then, shares have tip-toed around the milestone, dipping below and climbing above the line several times until the end of November 2020.
See red dots below.
Apple’s market cap.
Since the COVID-19 bear recovery, aided by a market fascination with Big Tech stocks that lasted through the third quarter of 2020, other tech companies got close to the $2 trillion valuation. However, none other has achieved Apple’s feat yet.
Amazon got very close to $1.9 trillion in early September, right before the quick correction in the Nasdaq that raised a concerning yellow flag across the tech space held shares back. Now, Amazon stock (one of the FAAMG losers so far in 2021) is worth $1.5 trillion.
The other company to see its equity flirt with the $2 trillion valuation was Microsoft. The stock was worth $1.9 trillion much more recently, in February 2021. Since then, it has pulled back, alongside the rest of the Nasdaq, to $1.75 trillion.
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(Disclaimers: the author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)
