Although most tech stocks climbed throughout Monday trading, Apple (AAPL) has crossed a major milestone. The stock surged 2.25 percent, gaining more than seven bucks to hit almost $330 bucks a share, enough to push the company's market cap north of $300 billion - for the first time ever.
Think of it as an important message to Apple from Wall Street, the message that comes amid swirling rumors of a possible Verizon iPhone announcement at CES and the assumed game-changing effects of such a product on competitive landscape.
It should be noted that market capitalization is an abstract category that in no way represents true value of a company's assets. Derived by multiplying a company's stock price with the number of shares oustanding, market cap represents both its current trading value on the stock market and investors' expectations regarding future profits.
Philip Elmer-DeWitt opined on the CNN Fortune blog that Apple crossed "a major psychological barrier" that could prompt investors to view the company differently. Some financial experts share his sentiment, like analyst Yair Reiner with Oppenheimer who predicted in a Monday note to clients that a Verizon iPhone would earn Apple "respect" on Wall Street because of both increased iPhone sales and a change in the dynamics of rivalry between Apple and Google:
The more lasting consequence of an Apple-Verizon deal won't be the number of incremental iPhones sold, but the scale of competition between iPhone and Android could tip sharply in Apple's favor. If so, Apple's earnings won't just rise from the additional Verizon units - they'll finally get some respect
AAPL's climb began last May when Apple found itself within spitting distance of Microsoft only to encompass the Redmond behemoth in market cap soon thereafter. After that, it's been a smooth sail and the Californian gadget maker is now the most valuable technology company and the second most valuable stock in the world. To take the #1 slot, Apple would have to beat Exxon Mobil (XOM).
Overtaking the petrochemical giant could be easier said than done, however. The difference in market capitalization between the two companies was less than $50 billion last October, but it has increased since to more than $74 billion.
Some analysts predict AAPL will trade for $1,000 a share in five years on the basis of an estimated $200 billion of annual revenue. Currently, Apple's annualized revenue is about $60 billion and growing fast. Additionally, Wall Street expects Apple's 2011 revenue to hit $89 billion.
That being said, should Apple's string of hit product announcements continue and oil prices plummet at some point, Exxon Mobil's lead might evaporate - leaving Apple with a unique opportunity to zoom past the petrochemical giant and become the most valued company in the world.