The phenomenal growth in stock prices of Apple, Google and more since the IPO
Tech companies, including those that control the digital entertainment space, are among the most successful companies in the world. A key indicator of this is the growth in their stock price, and we are amazed at how technologies have advanced over the years.
Companies like Netflix and Amazon launched their initial public offering (IPO) about two decades ago. The price of their shares has now skyrocketed.
Then there’s Google, Apple, Facebook, and Tesla, each a giant in the tech, service, and business world. Among them, Apple was the only major player in the stock market at the turn of the century.
Fueled by constant innovation and smart decisions, companies have led to their phenomenal rise, which in turn has served companies and their shareholders well.
Investing in stocks is considered one of the most profitable ways to increase wealth, provided you can – to borrow The Rock’s famous slogan – “smell what’s cooking.” The growth in the stock prices of these companies holds lessons for market analysts and investors.
To put it simply, someone who might have bought only one Apple stock in 1980 is now rolling on the greenbacks. The same goes with a shareholder in Amazon, a company that has experienced an unparalleled growth rate.
Take a look at these major tech players who have been a boon to investors who trusted them from the start.
(Main image: Tech Daily / Unsplash)
(Featured Image: Patrick Weissenberger / Unsplash)
One of the most successful technology companies in the world, Apple Inc., has become an essential part of the daily lives of millions of people around the world. From iconic iPhones and Macs to advanced wearable devices, tablets, home technology and the most popular virtual assistant, Siri, Apple has been at the forefront of a technological revolution that has changed the user experience. .
Its tremendous popularity and ability to market more advanced products than before directly affects its stock price. This is why Apple stocks are among the most profitable investments. In August 2020, it became the first publicly traded US company to exceed US $ 2 trillion (RM 8.3 trillion) in valuation.
The highest ever for an Apple stock was around US $ 702 (RM 2,910) in September 2012. So why is its stock trading at US $ 145 (RM 601) at the time of writing on 27 Aug 2021?
To a layman, it would appear that a stock that was worth US $ 22 (RM91) in 1980 has only risen about six times to date. But it is far, very far from the point.
The answer to this “confusion” is called split.
According to Apple’s Investor Relations FAQ, âApple went public on December 12, 1980 at US $ 22.00 per share. The stock has split five times since the IPO, so on a division adjusted basis, the IPO’s share price was US $ 0.10. “
Whenever Apple shares seemed to be soaring, they were divided to ensure that new investors could buy the shares. Shareholders own more shares after a split, but the value of each is divided among the new ones created. The market capitalization remains the same.
If we calculate the price base split adjustment technique, the value of a single Apple stock has increased by at least 144,900% from the day of IPO in 1980 until August 27, 2021. This means that the combined value of all splits of a US $ 22 share purchased then is approximately US $ 32,000 (RM 132,704) today.
And its value is only increasing.
When Netflix went public on May 23, 2002, even the best market experts could not have predicted that it would become one of the biggest OTT platforms in less than two decades.
With over 200 million subscribers in 190 countries, Netflix dominates the streaming world like no other platform. It has redefined home entertainment and is expanding its footprint more and more year on year.
Like Apple, Netflix has also split its shares – twice.
At the time of launch, one share was priced at US $ 15 (RM62). Split-adjusted IPO price is $ 1.07 (RM 4.40) because one share bought on the day of listing in 2002 yielded 14 shares after a 2-for-1 split in 2004 and a 7-to-1 division in 2015.
So while the current Netflix share price is $ 548 (RM 2,272), the value of a share at $ 15 (RM 62) has increased by about 51,301% after adjusting for splits. This means that if you had bought one Netflix share on May 23, 2002, you would have had 14 Netflix shares today, with a total value of US $ 7,672 (RM 31,816).
Social media giant Facebook went public on May 18, 2012. In the nine years since it launched its IPO, the company led by Mark Zuckerberg has never carried out a stock split.
At the time of launch, the social media platform’s stock was priced at US $ 38 (RM158) per share. Its share price has grown steadily. Today, it is US $ 364 (RM 1,510) per share, an increase of 857%, or nearly nine times the original price.
So if you bought 1,000 Facebook shares for $ 38,000 (RM 158,000) on May 18, 2012, they are now worth $ 364,000 (RM 1.5 million). That’s a decent return on investment in nine years for a business that’s only going to grow in the years to come.
In its second quarter 2021 results released on July 28, 2021, Facebook said its daily active users grew 7% year-over-year to reach 1.91 billion on average. Its net profit grew 101% year-over-year.
Tesla is a household name in the world of electric vehicles. In fact, Tesla can be credited with accelerating the use of sustainable, clean energy by building electric vehicles.
On June 29, 2010, Tesla launched its IPO at US $ 17 (RM70) per share. Today, its stocks are the best-performing in the automotive industry and one of the best-performing among large tech companies.
Since the launch of its IPO, Tesla has only experienced one split on August 31, 2020. This 5-for-1 split meant that the holder of one Tesla share before the split became the holder of five shares after the split. .
Tesla shares are currently hovering above US $ 700 (RM 2,902). This means that from now on, someone who bought, say, one share for US $ 17 in 2010 now owns five shares worth US $ 3,500 (RM14,514). The adjusted percentage increase in the division of the value of Tesla shares is therefore approximately 20,490%.
The jump is phenomenal and chances are it will climb higher than it is today.
Tesla is at the forefront of an automotive revolution, manufacturing nearly 500,000 cars in 2020. As of March 2020, co-founder and CEO Elon Musk announced on Twitter that the company had manufactured its millionth car.
Founded 27 years ago by Jeff Bezos, Amazon went public on May 15, 1997.
The price of a single share at the time was US $ 18 (RM75). Between 1997 and 1999, Amazon divided its shares three times. While the first two were 2 to 1, the last one was 3 to 1. This means that the owner of one share at the time of the IPO now owns 12 shares.
Trading at US $ 3,316 (RM13,751) per share, Amazon is currently one of the more expensive stocks on the market. So 12 shares are worth US $ 39,792 (RM 165,017), a staggering growth in the share price of 220,966% on a division-adjusted IPO price.
The pandemic has swelled Amazon’s revenue. According to The Associated Press, the company’s revenue growth rate rose to 35-40% in May 2020, from 20-21% in the days before the pandemic. The momentum continued until the first quarter of 2021, with a growth rate reaching 41%.
It won’t be an exaggeration to say that Google today is synonymous with the Internet. A simple search engine founded on September 4, 1998 by Sergey Brin and Larry Page virtually controls people’s lives, whether everyone realizes it or not.
Google’s IPO was launched on August 19, 2004, at US $ 85 (RM352) per share. Following a reorganization in 2015, Google became a subsidiary of Alphabet. The Google shares that are traded today are therefore Alphabet shares.
Unlike most large tech companies, Google has three different types of stocks: Class A, Class B, and Class C. Only Class A (NASDAQ code GOOGL) and class C (code NASDAQ GOOG) are traded. .
Class B is owned by the founders and other key people of the company. Class A shares have voting rights while Class C shares have none. Class B shareholders have even more influence on the vote than class A.
In short, there isn’t much of a difference between the prices of Class A and Class C shares. While Class A was trading at US $ 2,842 (RM11,785), Class C was trading at. US $ 2,856 (RM 11,843) at time of writing.
Both classes were created in 2014 when Google made its first and only division. The 2-for-1 split gave holders of one Google stock another to keep. Without going into how this affected voting rights, let’s just say that the US $ 85 is now worth US $ 5,700 (RM 23,638).