The Race to One Trillion

by - 3 min read

The Race to One Trillion

by admin - 3 min read

by admin

 

For companies that already trade in the hundreds of billions, becoming a trillion-dollar company wouldn’t make any of them much more of a financial juggernaut than they already are. But it’s more than just bragging rights; reaching this milestone would demonstrate an unprecedented level of success and industry dominance. However, it’s a race full of hurdles for the companies in contention.

While Apple is on track by some estimates to reach the $1 trillion valuation this year, shifts in the stock market could alter the company’s momentum. Apple is already the world’s most valuable company, but there are plenty of factors that could easily affect the tech giant’s value. We need look no further than some of the other companies that were once serious trillion-dollar candidates.

Amazon once had great potential to reach this imaginary summit. The online retailer and cloud-computing giant reached a market cap of $690 billion earlier this year and was growing at a faster rate than Apple. Amazon’s earnings more than doubled year-over-year last quarter and, in the past three years, its stock rose 300% (by comparison, Apple’s stock only rose 40% in the same period). But following inflammatory Twitter attacks from US President Donald Trump, the company lost $60 billion in market cap in a single week. Many investors hurried to sell their shares when the president accused Amazon of wasting taxpayer dollars and having an unfair deal with the US Postal Service (even though the latter complaint is inaccurate). Amazon is certainly not at risk of filing for bankruptcy any time soon, but this issue seemed to take the company out of the immediate running to reach $1 trillion.

In a different yet similarly costly scenario, Facebook has just recently shot itself in the foot in the trillion-dollar race. Through a political consulting firm, Cambridge Analytica, the data of at least 50 million Facebook users has been compromised. This privacy breach comes on the heels of the news that the social media juggernaut allowed Russian propagandists to post fake ads all over its network, influencing many voters in America’s 2016 election. Accompanying the trending #DeleteFacebook hashtag, Facebook lost $100 billion of its market value in less than two weeks. The company’s market cap has fallen below $500 billion and is nowhere close to the $1 trillion mark in comparison to its competitors.

This leaves the only other American company in contention, Google’s parent company, Alphabet. The company’s market cap is growing, currently at $710 billion, but a potential controversy looms that may impact its value. Over 3,100 Google employees have signed a letter pleading with to management to reconsider its involvement in Project Maven, a Pentagon pilot program. The letter implores management with the phrase, “don’t be evil”, the company’s famous one-time motto (which the search giant dropped when it formed Alphabet in 2015). Creating drones with destructive capabilities not only flies in the face of the old motto, but it creates a perception that Alphabet/Google may actually be evil. For now, it’s too early to say whether this story will have a lasting negative impact on Alphabet’s value as a company.

There’s a good chance we won’t have to wait more than a few months to witness the history-making occasion of a company crossing the $1 trillion threshold; as of April 2018, Apple’s market cap is less than $140 billion away. The company earned $48 billion in profits in the latest financial year – about as much as Microsoft and JP Morgan combined. While it’s still a race, the trillion-dollar figure is less of a finish line than it is a checkpoint, a milestone granting the winner a huge competitive edge.


 

Alex Correa | Staff Writer

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