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Apple – First Trillion Dollar Company?

Wall Street has never had a company break the trillion dollar mark before, but Apple seems to be on track to becoming the first company to do so. Shares of the company have reached an all time high of $117.57, and the company is currently capitalized at $680 billion (greater than the combined capitalizations of Microsoft, Amazon, Netflix, and Twitter). There are many trends, now and in the past, that have been influencing the company’s stock: the Russian Revolution, the tech bubble of the 90’s, Nasdaq’s struggle to recover from the 2000 crash, Apple’s lack of favor with institutional investors, and capital expansion, to name a few. The company also faces the skeptics, bear arguments, and critics involved whenever a milestone, especially one as large as a trillion-dollar capitalization, approaches. 

This is an example of network effects covered in class. At the advent of the company, the dominating force within the tech world was Microsoft; indeed, the company had essentially been bailed out by Microsoft during the 90’s. At this stage, the tipping point equilibrium, z, was low, and consumers were uncertain to the future success of Apple. However, as more and more consumers began to use Apple’s products, the tipping point was surpassed, and Apple became more and more successful over the years. Now, at the current level, it is likely that Apple’s equilibrium will continue to rise, given the upward pressure applied by the market. As mentioned before, Apple lacks favor with institutional investors; if said institutions invested more heavily in Apple, the company’s stock would rise even more. At this point, at least 5 analysts have updated their price targets for Apple; if these targets keep increasing, it is likely that market pressure and network effects could push Apple towards becoming the first trillion dollar company.

http://www.forbes.com/sites/markrogowsky/2014/11/23/trillion-dollar-baby-can-apple-go-where-no-stock-has-gone-before

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