Technology companies, including those that command the digital entertainment space, are among the world’s most successful businesses. A key indicator of this is their share price growth, and we are amazed at how technologies have advanced over the years.
Then, there is Google, Apple, Facebook and Tesla — each a giant in the world of tech, services and business. Among them, Apple was the only major player in the stock market at the turn of the century.
Powered by constant innovations and smart decisions, businesses have led to their phenomenal rise, which, in return, has held both the companies and their shareholders in good stead.
Investing in stocks is seen as one of the most profitable ways to increase wealth, provided you can — to borrow The Rock’s famous catchphrase — “smell what’s cooking”. The share price growth of these companies bear lessons for market analysts and investors.
To put it simply, someone who may have bought just a single stock in Apple in 1980 is now rolling in greenbacks. The same is with a shareholder of Amazon, a company that has witnessed a growth rate like none other.
Take a look at these major tech players who have been a boon to investors who had faith in them at the very beginning.
(Main image: Tech Daily/Unsplash)
(Featured image: Patrick Weissenberger/Unsplash)
One of the world’s most successful technology companies, Apple Inc., has become an essential part of the daily lives of millions around the world. From the iconic iPhones and Macs to advanced wearables, tablets, home technology and the most popular virtual assistant, Siri, Apple has been at the forefront of a technological revolution that has changed user experience.
Its tremendous popularity and ability to launch products in the market that are more advanced than those before directly affects its stock prices. This is why Apple stocks are among the most profitable investments. In August 2020, it became the first publicly listed US company to go past US$2 trillion (RM8.3 trillion) in valuation.
The highest ever that an Apple stock commanded was around US$702 (RM2,910) in September 2012. So why is it that its share is trading at US$145 (RM601) at the time of writing on 27 August 2021?
To a layman, it would seem that a stock that was worth US$22 (RM91) in 1980 has only risen by around six times to date. But that is a long, long way off the mark.
The answer to this “confusion” is called split.
According to Apple’s Investor Relations FAQ, “Apple went public on 12 December, 1980, at US$22.00 per share. The stock has split five times since the IPO, so on a split-adjusted basis the IPO share price was US$.10.”
Every time Apple stocks appeared to be going through the roof, they were split to ensure that new investors can buy shares. Shareholders own more stocks following a split but the value of each of them gets divided between the new ones created. The market capitalisation remains the same.
If we calculate the price basis split-adjusted technique, the value of a single Apple stock has risen by at least 144,900 percent from the day of the IPO in 1980 to 27 August, 2021. This means that the combined worth of all the splits of a US$22 stock bought then is around US$32,000 (RM132,704) today.
And its value is only rising.
When Netflix went public on 23 May, 2002, not even the best of market experts could have predicted that it would go on to become one of the biggest OTT platforms in less than two decades.
With more than 200 million subscribers in 190 countries, Netflix commands the world of streaming like no other platform. It has redefined home entertainment and is increasingly expanding its footprint with each passing year.
Like Apple, Netflix, too, split its shares — twice.
At the time of launch, one share was priced at US$15 (RM62). The split-adjusted IPO price comes to US$1.07 (RM4.40) because a stock bought on the day of listing in 2002 has resulted in 14 shares after a 2-for-1 split in 2004 and a 7-for-1 split in 2015.
So, while the current Netflix stock price is US$548 (RM2,272), the value of a US$15 (RM62) stock has risen by around 51,301 percent after adjustment for splits. This means had you bought one Netflix stock on 23 May 2002, you would have had 14 Netflix shares today, whose total value is US$7,672 (RM31,816).
Social networking behemoth Facebook went public on 18 May 2012. In the nine years since the launch of its IPO, the Mark Zuckerberg-led company has never had a stock split.
At the time of the launch, the social media platform’s stock was priced at US$38 (RM158) per share. Its share price growth has been steady. Today, it is US$364 (RM1,510) per share — a rise of 857 percent, or almost nine times the original price.
So, if you had bought 1,000 shares of Facebook for US$38,000 (RM158,000) on 18 May, 2012, they are now worth US$364,000 (RM1.5 million). That’s a decent return on investment in nine years from a company that will only become bigger in the coming years.
In its second quarter 2021 results announced on 28 July, 2021, Facebook said that its daily active users rose 7 percent year-over-year to 1.91 billion on average. Its net income witnessed a 101 percent rise year-over-year.
Tesla is a renowned name in the world of electric vehicles. In fact, Tesla can be credited with accelerating the use of sustainable and clean energy by making electric vehicles.
On 29 June, 2010, Tesla launched its IPO at US$17 (RM70) per share. Today, its stocks are the best performing in the auto industry and one of the best performing among the Big Tech companies.
Since the launch of its IPO, Tesla has had only one split on 31 August, 2020. This 5-for-1 split meant that the holder of a Tesla stock before the split became the holder of five of stocks post split.
Tesla shares are hovering over US$700 (RM2,902) today. This means, as of now, someone who bought, for instance, one share for US$17 in 2010 now holds five shares worth US$3,500 (RM14,514). The split-adjusted percentage rise in the value of Tesla shares, therefore, stands at around 20,490 percent.
The jump is phenomenal and there is every bit of possibility that it will rise higher than what it is today.
Tesla is at the forefront of a vehicular revolution, manufacturing close to 500,000 cars in 2020. In March 2020, co-founder and CEO Elon Musk announced on Twitter that the company had made its one millionth car.
Founded 27 years ago by Jeff Bezos, Amazon launched its IPO on 15 May, 1997.
The price of a single stock at the time was US$18 (RM75). Between 1997 and 1999, Amazon split its shares thrice. While the first two were 2-for-1, the last was a 3-for-1 split. This means that the holder of one stock at the time of IPO now has 12 shares.
Trading at US$3,316 (RM13,751) per share, Amazon is currently one of the highest-priced stocks in the market. Thus, 12 shares are worth US$39,792 (RM165,017) — a mind-boggling share price growth of 220,966 percent on a split-adjusted IPO price.
The pandemic boosted Amazon’s revenue. According to The Associated Press, the revenue growth rate of the company jumped to the 35-40 percent range by May 2020, compared to a 20-21 percent in the days before the pandemic. The momentum was maintained through the first quarter of 2021, with the growth rate climbing to 41 percent.
It won’t be an exaggeration to say that Google is a synonym of the internet today. A simple search engine founded on 4 September, 1998, by Sergey Brin and Larry Page is practically in control of people’s lives, whether or not anyone realises it.
Google’s IPO was launched on 19 August, 2004, at US$85 (RM352) per share. Following a reorganisation in 2015, Google became a subsidiary of Alphabet. Google stocks that are traded today are thus the shares of Alphabet.
Unlike most Big Tech companies, Google has three different types of shares — Class A, Class B and Class C. Only Class A (NASDAQ ticker GOOGL) and Class C (NASDAQ ticker GOOG) are traded.
Class B is held by the founders and other key persons of the company. Class A shares have voting rights while Class C shares have none. Holders of Class B shares have even more influence on voting than Class A.
Long story short, there is not 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 (RM11,843) at the time of writing.
Both classes were created in 2014 when Google carried out its first and only split. The 2-for-1 split gave holders of one Google stock another to hold on to. Without going into how it affected voting rights, let us just say that the US$85 is now worth US$5,700 (RM23,638).