Apple Market Cap in Perspective. December 19, 2017

Transcription

1 Apple Market Cap in Perspective December 19, 2017

2 Background Spurred by the inclusion of Apple in the DJIA, in 2015, CRSP produced a paper, Is Apple the All- Time Market Cap Champ? At that time, Apple s market capitalization was in the $700 billion region. With Apple reaching a market-cap record in November 2017, CRSP recently revisited this topic, using two proprietary data sets for analysis. 1

3 Understanding Datasets Available for Analysis Two CRSP datasets are available for analysis Dataset Description CRSP Research Data CRSP US Stock Database CRSP Historical Indexes CRSP US Treasury Database Long history (Dec Nov. 2017) Used by Academic Researchers to analyze U.S. Markets Broadest representation of U.S. Markets High accuracy and consistency of data across history CRSP Investment Indexes CRSP US Total Market Presents markets and securities from investor perspective since only includes issues that are considered investable Has a substantial amount of funds (over $700 billion as of 11/30/2017) tracking the index Data begins March

4 : Step 1 Approach Use CRSP Research Data to analyze the size of the company within the historical context Step 2 Use CRSP Investment Indexes to take a look at the difference between theoretical and investor experience 3

5 Top 20 by Market Cap Unadjusted for Inflation Step 1 Unadjusted for Inflation Rank Company Market Cap ($bn) Earliest Date¹ Averages 1 APPLE INC $903 Nov ALPHABET INC $688 Nov MICROSOFT CORP $655 Nov GENERAL ELECTRIC CO $594 Aug AMAZON COM INC $576 Nov-2017 $683 6 EXXON MOBIL CORP $527 Oct CISCO SYSTEMS INC $524 Mar INTEL CORP $502 Aug BERKSHIRE HATHAWAY INC DEL $478 Nov FACEBOOK INC $437 Nov-2017 $ JOHNSON & JOHNSON $385 Oct JPMORGAN CHASE & CO $365 Nov WAL MART STORES INC $310 Dec PFIZER INC $308 Jul WELLS FARGO & CO NEW $301 Jul-2015 $ BANK OF AMERICA CORP $295 Nov CITIGROUP INC $286 Feb A T & T CORP $270 Mar A T & T INC² $268 Jul ORACLE CORP $261 Sep-2000 $276 Source: CRSP US Stock Database Note: Data as of 11/30/2017 ¹ Refers to the earliest date when the company achieved its highest market cap; note due to trading the company may reach the same closing price on several days resulting in the same total market capitalization ² AT&T Inc. is the company formed after AT&T Corp was acquired by SBC 4

6 Step 1 ($bn) $1,000 $900 $903 Top 20 by Market Cap ($bn) Unadjusted for Inflation $800 $700 $688 $655 $600 $500 $400 $594 $576 $527 $524 $502 $478 $437 $385 $365 $300 $310 $308 $301 $295 $286 $270 $268 $261 $200 $100 $0 Source: CRSP US Stock Database Note: Data as of 11/30/2017; ¹ AT&T Inc. is the company formed after AT&T Corp was acquired by SBC 5

7 Top 20 by Market Cap Adjusted for Inflation¹ Step 1 Adjusted for Inflation¹ Rank Company Market Cap ($bn) Earliest Date² Averages 1 APPLE INC $903 Nov MICROSOFT CORP $901 Dec GENERAL ELECTRIC CO $848 Aug CISCO SYSTEMS INC $755 Mar INTEL CORP $716 Aug-2000 $825 6 ALPHABET INC $688 Nov EXXON MOBIL CORP $623 Jul AMAZON COM INC $576 Nov BERKSHIRE HATHAWAY INC DEL $478 Nov WAL MART STORES INC $454 Dec-1999 $ PFIZER INC $440 Jul FACEBOOK INC $437 Nov CITIGROUP INC $402 Feb A T & T CORP $389 Mar JOHNSON & JOHNSON $385 Oct-2017 $ LUCENT TECHNOLOGIES INC $378 Dec ORACLE CORP $371 Sep INTERNATIONAL BUSINESS MACHS COR $370 Jul JPMORGAN CHASE & CO $365 Nov AMERICAN INTERNATIONAL GROUP INC $340 Dec-2000 $365 Source: CRSP US Stock Database; CRSP US Treasuries Database Note: Data as of 11/30/2017 ¹ Monthly CPI-U Index was used to adjust for inflation; CPI-U for November 2017 was assigned the value of based on data at ² Refers to the earliest date when the company achieved its highest market cap; note due to trading the company may reach the same closing price on several days resulting in the same total market capitalization 6

8 Step 1 ($bn) $1,000 Top 20 by Market Cap ($bn) Adjusted for Inflation¹ $900 $903 $901 $848 $800 $700 $600 $755 $716 $688 $623 $576 $500 $478 $454 $440 $437 $400 $300 $402 $389 $385 $378 $371 $370 $365 $340 $200 $100 $0 Source: CRSP US Stock Database; CRSP US Treasuries Database Note: Data as of 11/30/2017 ¹Monthly CPI-U Index was used to adjust for inflation; CPI-U for November 2017 was assigned the value of based on data at 7

9 Top 20 by Percent of Total Market¹ (since 1925) Step 1 Data for the period Dec Nov Rank Company Percent of Total Market¹ Number of Issues in the Index² Earliest Date³ Averages 1 A T & T CORP 12.97% 704 May GENERAL MOTORS CORP 7.94% 584 Mar INTERNATIONAL BUSINESS MACHS COR 6.78% 2,303 Jan DU PONT E I DE NEMOURS & CO 6.02% 1,050 Jul EXXON MOBIL CORP 6.00% 1,065 Sep % 6 GENERAL ELECTRIC CO 3.96% 729 Apr CONSOLIDATED EDISON INC 3.77% 702 Dec MICROSOFT CORP 3.70% 7,938 Dec APPLE INC 3.19% 6,340 Sep MARATHON OIL CORP 3.02% 724 Dec % 11 CHEVRON CORP NEW 2.89% 518 Jul CISCO SYSTEMS INC 2.87% 7,884 May EASTMAN KODAK CO 2.84% 2,606 Jul INTEL CORP 2.76% 7,921 Aug U G I CORP NEW 2.59% 702 Dec % 16 TEXACO INC 2.48% 2,103 Nov R J R NABISCO INC 2.40% 624 Jan UNION CARBIDE CORP 2.40% 801 Dec WAL MART STORES INC 2.36% 6,609 Oct PFIZER INC 2.32% 6,371 May % Source: CRSP US Stock Database; CRSP Historical Indexes Note: Data as of 11/30/2017 ¹ Total Market is defined as CRSP NYSE/NYSEMKT/NASDAQ/Arca Value-Weighted Market Index (INDNO ) ² Number of issues refers to the number of companies included in the CRSP NYSE/NYSEMKT/NASDAQ/Arca Value-Weighted Market Index ³ Refers to the earliest date when the company achieved its highest percent 8

10 Step % Market Cap as Percent of Total Market¹ Dec Nov % 13.00% 12.97% 12.00% 11.00% 10.00% 9.00% 8.00% 7.00% 6.00% 7.94% 6.78% 6.02% 6.00% 5.00% 4.00% 3.96% 3.77% 3.70% 3.00% 3.19% 3.02% 2.89% 2.87% 2.84% 2.76% 2.59% 2.48% 2.40% 2.40% 2.36% 2.32% 2.00% 1.00% 0.00% Source: CRSP US Stock Database; CRSP Historical Indexes Note: Data as of 11/30/2017 ¹ Total Market is defined as CRSP NYSE/NYSEMKT/NASDAQ/Arca Value-Weighted Market Index (INDNO ) 9

11 Top 20 by Percent of Total Market (since 1980) Step 1 Data for the period Jan Nov Rank Percent of Total Market¹ Percent of Total Market¹ Number of Issues in the Index² Earliest Date³ Averages 1 INTERNATIONAL BUSINESS MACHS COR 4.44% 6,225 Dec A T & T CORP 4.24% 5,256 Aug MICROSOFT CORP 3.70% 7,938 Dec EXXON MOBIL CORP 3.67% 6,482 Nov GENERAL ELECTRIC CO 3.56% 7,267 Jun % 6 APPLE INC 3.19% 6,340 Sep CISCO SYSTEMS INC 2.87% 7,884 May INTEL CORP 2.76% 7,921 Aug WAL MART STORES INC 2.36% 6,609 Oct PFIZER INC 2.32% 6,371 May % 11 AMOCO CORP 1.99% 4,886 Nov ALPHABET INC 1.98% 6,708 Nov CITIGROUP INC 1.94% 7,021 Nov ALTRIA GROUP INC 1.93% 6,696 Sep COCA COLA CO 1.87% 8,692 May % 16 PROCTER & GAMBLE CO 1.79% 6,482 Nov AMERICAN INTERNATIONAL GROUP INC 1.76% 7,057 Oct JOHNSON & JOHNSON 1.75% 6,617 Oct MOBIL CORP 1.73% 4,761 Mar AMAZON COM INC 1.66% 6,708 Nov % Source: CRSP US Stock Databases; CRSP Historical Indexes Note: Data as of 11/30/2017 ¹ Total Market is defined as CRSP NYSE/NYSEMKT/NASDAQ/Arca Value-Weighted Market Index (INDNO ) ² Number of issues refers to the number of companies included in the CRSP NYSE/NYSEMKT/NASDAQ/Arca Value-Weighted Market Index ³ Refers to the earliest date when the company achieved its highest percent 10

12 Step % Market Cap as Percent of Total Market¹ Jan Nov % 4.24% 4.00% 3.70% 3.67% 3.56% 3.19% 3.00% 2.87% 2.76% 2.36% 2.32% 2.00% 1.99% 1.98% 1.94% 1.93% 1.87% 1.79% 1.76% 1.75% 1.73% 1.66% 1.00% 0.00% Source: CRSP US Stock Database; CRSP Historical Indexes Note: Data as of 11/30/2017 ¹ Total Market is defined as CRSP NYSE/NYSEMKT/NASDAQ/Arca Value-Weighted Market Index (INDNO ) 11

13 Step 1 20% 18% 16% 14% 12% INTERNATIONAL BUSINESS MACHS COR A T & T CORP MICROSOFT CORP EXXON MOBIL CORP GENERAL ELECTRIC CO APPLE INC CISCO SYSTEMS INC INTEL CORP WAL MART STORES INC PFIZER INC ALPHABET INC AMAZON COM INC FACEBOOK INC Top 10 by Percent of Total Market¹ (plus Alphabet, Amazon, and Facebook) Jan Nov % 8% 6% 4% 2% 0% 1/2/1980 1/2/1981 1/2/1982 1/2/1983 1/2/1984 1/2/1985 1/2/1986 1/2/1987 1/2/1988 1/2/1989 1/2/1990 1/2/1991 1/2/1992 1/2/1993 1/2/1994 1/2/1995 1/2/1996 1/2/1997 1/2/1998 1/2/1999 1/2/2000 1/2/2001 1/2/2002 1/2/2003 1/2/2004 1/2/2005 1/2/2006 1/2/2007 1/2/2008 1/2/2009 1/2/2010 1/2/2011 1/2/2012 1/2/2013 1/2/2014 1/2/2015 1/2/2016 1/2/2017 Source: CRSP US Stock Database; CRSP Historical Indexes Note: Data as of 11/30/2017 ¹ Total Market is defined as CRSP NYSE/NYSEMKT/NASDAQ/Arca Value-Weighted Market Index (INDNO ) 12

14 CRSP Investment Indexes Step 2 Goal of CRSP Investment Indexes: CRSP s investable, real-time indexes strive to blend advancements in academic research with current commercial practice in a fundamentally sound manner and under the premise that an index must reflect the way that money managers actually invest To achieve the above goal, CRSP Investment Indexes filter out securities that don t meet investability criteria In addition, CRSP Investment Indexes weight companies based on Float- Adjusted Capitalization, which reflects the portion of company s Total Shares Outstanding available in the market CRSP Historical Index All Issues on US Exchanges (NYSE, NYSE MKT, ARCA, NASDAQ) Corporations & REITs Common Shares Domicile in US Investability Screens CRSP Investment Index Market Capitalization Float Shares Trading Volume Other Note: The graphic is used for illustration purposes, only to highlight some of the differences between CRSP Historical Index and CRSP Investment Indexes and does not represent the actual process of creating CRSP Investment Indexes. Please refer to Methodology Guide ( for CRSP Investable Index methodology. 13

15 Why use CRSP U.S. Total Market Index CRSP US Total Market Index (NASDAQ Symbol CRSPTMT) covers almost 100 percent of US investable market which is why it is a good representation of the investor s entire opportunity set Companies are weighted by float-adjusted market capitalization which represents the proportion that is available to the investor Step 2 Includes US companies, not companies that are listed in the US 14

16 Comparing Top 10 Companies by Percent of Total Market as of November 30, 2017 Step 2 Using CRSP Research Data Using CRSP Investment Index Percent of U.S. Rank Company Percent of Total Market¹ Company Investable Total Market² 1 APPLE INC 2.49% APPLE INC COM 2.93% 2 ALPHABET INC 1.88% MICROSOFT CORP COM 2.38% 3 MICROSOFT CORP 1.84% ALPHABET INC 2.24% 4 AMAZON COM INC 1.60% AMAZON COM INC COM 1.76% 5 BERKSHIRE HATHAWAY INC DEL 1.35% FACEBOOK INC 1.54% 6 FACEBOOK INC 1.20% BERKSHIRE HATHAWAY 1.38% 7 JOHNSON & JOHNSON 1.06% JOHNSON & JOHNSON COM 1.37% 8 JPMORGAN CHASE & CO 1.03% JPMORGAN CHASE & CO COM 1.35% 9 EXXON MOBIL CORP 1.00% EXXON MOBIL CORP COM 1.29% 10 BANK OF AMERICA CORP 0.83% BANK OF AMERICA CORP COM 1.02% Source: CRSP US Stock Databases; CRSP Historical Indexes; CRSP Investment Indexes Note: Data as of 11/30/2017 ¹ Total Market is defined as CRSP NYSE/NYSEMKT/NASDAQ/Arca Value-Weighted Market Index (INDNO ); Percent of Total Market is computed using company s total shares outstanding ² Total Market is defined as CRSP US Total Market (NASDAQ Symbol CRSPTMT); Percent of Total Market is computed using company s float-adjusted market capitalization 15

17 Appendix 16

18 Market Capitalization as the Size of the Company To measure the size of the company we will use Total Market Capitalization CRSP computes Market Capitalization as TCAP = Shares Outstanding (in 1000s) * Closing Price Sources for more information: TCAP: Shares Outstanding: Closing Price: 17

19 Adjusting for Inflation If we want to compare Market Cap from different times, we may want to adjust for inflation To adjust for inflation, we will use CPI-U time series monthly values from CRSP US Treasuries Database Note, this implies that we assume that a dollar at the beginning of the month and end of the month will be treated the same We used CPI-U value as published by US Bureau of Statistics Since we use data through November 2017, CPI-U for November 2017 was not available in the database. We used value from To convert past dollars to the present adjusting for inflation, we did the following calculation: Step 1: FFFFFFFFFFFF = CCCCCC UU NNNNNN2017 CCCCCC UU PPPPPPPP Step 2: $ NNNNNN2017 = $ PPPPPPPP FFFFFFFFFFFF 18

20 Percent of Total Market Since the Capital Markets have been evolving, it maybe useful to look at the company as a percent of the Total Market For the historical analysis we define Total Market as market capitalization of CRSP NYSE/NYSEMKT/NASDAQ/Arca Value-Weighted Market Index that includes all issues listed on the exchanges included in the name assuming that there is data to determine the price and shares outstanding Note, ADRs are excluded from the index Formula used to compute Percent of Total Market for a company at a given time t: %TTTTTTTTTT MMMMMMMMMMMM tt = CCCCCCCCCCCCyy ss MMMMMMMMMMMM CCCCCCCCCCCCCCCCCCCCCCCCCCCC tt TTTTTTTTTT MMMMMMMMMMMM CCCCCCCCCCCCCCCCCCCCCCCCCCCC tt For more information: 19

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