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Why Is Apple The World’s Most Valuable Company?

Apple (NASDAQ: AAPL) products are splashed across the world, with more than 1.4 billion active devices, so it’s no surprise that it’s the most valuable company on the planet. Its hero product is the iPhone and is seen in the hands of around 900 million people, helping the company maintain its almost $2 trillion valuation, overtaking Saudi Aramco.

This article was originally published on MyWallSt Investing for Everyone.

 

Apple has thrived in 2020

Apple had a blockbuster quarter, its earnings exceeding analysts’ expectations. The tech giant reported revenue of $59.7 billion, 11% more than the same time last year. The coronavirus has presented challenges for the company but it did a stellar job of continuing manufacturing and meeting demands of its customers during the testing times. 

Apple’s impressive third-quarter results were fuelled by both the sales of its staple iPhone product, which made $26.4 billion, services like its Apple TV+ which generated $13.4 billion, and wearables such as its Apple Watch that offered $6.4 billion. Products and services both impressed with growth over the period, climbing by 10% and 15% respectively. 

Once Apple has adjusted to the speedbumps of the coronavirus, it is tipped to launch its iPhone 12 which will have 5G capabilities, along with a new Apple Watch, and many more products and services. These highly anticipated products are part of the fuel behind the increasing market valuation for the company, as they are due to inject a lot of revenue. The company is also set to release a cheaper iPhone product at the beginning of 2021 to appeal to a wider customer base and fend off competition.   

 

How does Apple make money?

The iPhone product usually makes up half of the company’s sales, but with global smartphone sales decline, growth has slowed. Since then Apple has shifted its focus on its wearables and services which are experiencing fast growth, Apple has also mastered the art of making it easy for consumers to connect all of their devices together. Even when people are using Apple Pay to buy their groceries, Apple gets a slice. The tech giant has a strong presence across various areas of our lives and is also now the second-largest music streaming platform in the world, with 68 million subscribers. 

 

 

 

Apple is also expanding into enterprise services, acquiring companies like Fleetsmith and Mobeewave which is a positive step into the future. If there are similar purchases going ahead, it will transform into the most lucrative offerings of Apple’s services. The company has really had to think outside the box and find out what consumers are wanting and the services they are using and integrate it into people’s daily routine. 

 

Is there competition?

Just because Apple is currently the most valuable company in the world, doesn’t mean it intends to slow down, as it faces mounting competition mainly from Samsung and Google (NASDAQ: GOOGL) in the smartphone space. As Apple ramps up its media services, it’s competing for the top spot with Spotify (NYSE: SPOT) and also the likes of Netflix (NASDAQ: NFLX). 

 

So, should you invest?

Apple is definitely finding more ways to expand its services and wearables part of its business and is expected to announce a cheaper version of the iPhone to keep up with the competition. Considering it posted impressive recent earnings, showcasing its loyal customer base, it is set to continue growing. Overall, Apple is a strong company — the most valuable one in the world — that could be worth investing in.

 

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Disclaimer Past performance is not a reliable indicator of future results.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.

*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.

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