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Apple share price hits 500 USD. WHAT?

 
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Bazza
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Joined: Sat Mar 21, 2009 11:16 am
Posts: 1468
Location: Loughborough

PostPosted: Sat Oct 16, 2010 3:34 pm    Post subject: Apple share price hits 500 USD. WHAT? Reply with quote

Hi all...

How can a company have a value 450,000,000,000 USD
and 500 USD/Share?

http://business.financialpost.com/2010/10/15/apple-inc-price-target-hits-us500-per-share/

Am I missing summat?
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Bazza, G0LCU...

Team AMIGA...
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Rhakios
Moderator


Joined: Thu Apr 07, 2005 12:18 am
Posts: 7620
Location: Midlands, UK

PostPosted: Sat Oct 16, 2010 7:03 pm    Post subject: Reply with quote

So, you never wondered how the little spot of financial bother we all find ourselves in came about? Rolling Eyes
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johnhudson
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Joined: Wed Aug 03, 2005 2:37 pm
Posts: 870

PostPosted: Sat Oct 16, 2010 8:45 pm    Post subject: Reply with quote

The number of shares can increase for several reasons; the company issues more shares to gain more money to invest; the company splits existing shares so that the price per share drops and you don't get silly figures for one share. Do this a few times and the total number of shares can go up quite a bit.

If you are buying shares at $300 a share, you are expecting a return of at least $15 a share per annum; one way of obtaining this is if the share price goes up - in the same way as people expect the value of their houses to rise. The other is that Apple can afford to give you $15 a share every year.

The more Apple can give you per share each year, the more people are prepared to buy the shares to get the return; so the price goes up. The problems come when Apple hits the buffers and can no longer offer that rate of return.
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