Whenever you buy private goods, say a car or new electronics, you may find yourself wondering whether the company you’re buying from is “one of the best”. Just like the argument between Apple and Android users has gone on forever, the method of figuring out what makes a company the best goes deeper, with close links to the data entry business.
Generally, we tend to look at market capitalization when organizing companies’ value, especially since the term “market cap” essentially refers to the total dollar market value of a company’s outstanding shares of stock.
Market caps are calculated by multiplying the company’s total amount of outstanding market shares by the current market price of one share. For example, if a company has 5 million shares, each selling for $10 each, that equates to a market cap of 50 million dollars.
This is the preferred method used by the investment community when calculating the size of a company, rather than using sales or total asset figures, since during an acquisition it makes it easy for the acquirer to determine whether it is worth it for them.
It comes as no surprise that Apple Inc. is the leading company on this list. Despite last year’s financial and health crisis, Apple’s market still boomed, with a total of over 1.4 billion active devices scattered around the world, the star being iPhones, owned by 900 million people.
Apple’s valuation amounted to two trillion US dollars in 2020 (2.25 this year), and the reason behind that is simple: the company did a phenomenal job of meeting demand and continued manufacturing even in trying times.
The tech company disclosed having revenue of 59.7 billion that quarter, amounting to an 11% increase compared to last year in the same period.
Since smartphones are losing popularity when looking at sales, Apple has shifted its focus on its tech wearables and services, as well as making its ecosystem (IOS) as comfortable for consumers as possible.
Apple is also expanding into enterprise services, and also is focused on becoming fully carbon neutral by 2030, making them one of the dream companies to work for.
Microsoft is currently the second-largest company, leading behind Apple at a valuation of 1.96 trillion US dollars. The company has always been about innovation, and whether you are a fan or not, the company’s resilience to advancing technologies is inadmissible, even if sometimes they had slow responses.
As opposed to Apple’s cult-like following and its tech exclusively being compatible with Apple products, Microsoft faces the challenge of accommodating and competing with other OEMs and their customers as well.
The breadwinner products of Microsoft include their operation system (Windows) and Microsoft Office, as well as other platforms.
Overall, ever since its founding in 1975, the company has had its ups and downs yet still maintained its leading stance.
Though it is a massive deal that both Apple and Microsoft have exceeded Saudi Aramco’s valuation, this company still is worth 1.89 trillion USD by market capitalization, which comes as no surprise.
The company supplies about 10% of the world’s crude oil, and a big reason behind its massive success is not only based on its geographical lottery win, but also that it produces oil for so much less than any other fracking company, topping out at about $2.80 per barrel of extracted oil, and selling at an easy $62 US.
The company announced its first public stock offering in 2019, and made investments into infrastructure as well, to expand its profits away and make it less dependent on oil.
Investing in the company isn’t ideal though, since it has stagnated massively before due to drone strikes in the past, halving the country’s oil exports within that period. Overall the conflicts that easily have risen and might arise regarding the company aren’t stable.
The reason Amazon is the leading retailer is mainly due to the experience it lends to customers. Customers tend to expect three main factors when shopping, the first being a wide selection of items to choose from, without needing to search so hard for it. Their market cap also represents their success, at 1.71 trillion USD.
The second factor Amazon has perfected is providing products at a lower price than other retailers. The final factor for customer satisfaction is the company’s ability to deliver orders speedily.
The tactic that the company used is named the “Amazon Flywheel”, and it starts with creating a good environment for customers, thus generating traffic. The sellers will follow traffic, wanting to place their products in front of the eyes of consumers. The influx of sellers results in a larger selection of products, and a better customer experience.
Alphabet was created in 2015 to become a parent company to Google, making it its subsidiary. The reason behind this was for Google to expand its domains past internet search and advertising, for it to become a tech conglomerate.
Alphabet has many businesses now under its wing that expand beyond its core search business. For example into robotics, anti-aging, healthcare, and life sciences in general. The conglomerate comes in at a valuation of 1.53 trillion USD.
This shift had minimal to no changes on the company, so you may wonder why they did it in the first place. The reason was to streamline provisions and to give investors more market visibility into its ventures, essentially to keep Google, or now Alphabet, leading. This also leads to a stock price jump.
This move also eased antitrust scrutiny, since so many different projects and companies being titled under a search engine umbrella term would’ve brought skepticism on the part of regulators.
Facebook ranks at 870 billion USD with 2.3 billion users, and it makes sense too. It’s been over sixteen years since Facebook blossomed from a dorm-room project, though it has had its ups and downs, especially in the media.
Facebook throughout its existence has grown massively through new feature additions, lifting registration limitations, and through its various mobile apps. The company has purchased many big-name companies, including Whatsapp and Instagram to name a few, so their ranking on this chart comes as no surprise.
Facebook itself is an easy interface to use, proving its ease through its wide age range of users. It also receives constant upgrades, engaging features, and is also used worldwide. Initially used by colleges and their students, since it needed college authentication, it then went public, thus cementing its place in history and in the market.
Tencent, though flying under the radar for investors, is one of the largest tech companies in China. Its mission is to promote sustainability and innovation. With its base in Shenzhen, it also has locations all around the world including Seoul, Tokyo, and California.
The company functions through gaming, streaming, social media, entertainment, advertising, and cloud services too. Its most popular asset is its instant messaging platform called QQ, but other highly popular ones include Tencent Gaming and AI development. The company has a market cap of 773 billion USD.
Tesla is best known through Elon Musk, but it was originally founded by two other entrepreneurs. Elon went on to become the company’s biggest investor and chairman. The biggest innovation Tesla Motors had on other competitors at the time was the fact it used lithium-ion batteries in its motors, just like the ones found in handheld electronics.
Tesla is valued at 710 billion USD, and the reason for that is that the company showed that not only are fully electric cars viable but can also be desirable. Its one downfall is that lithium-ion isn’t a sustainable battery source in such large quantities.
The innovative approach of Alibaba was to create an ecosystem where consumers and businesses of all types could interact with their environments easily, which is why it comes as no surprise that Alibaba has a value by market cap of 657 billion USD.
We must also take into account that this company isn’t simply for online commerce, but for online sprawling, made for a network of sellers that are data-driven, marketers, service providers, and so on, essentially doing what other companies such as eBay and Amazon have done.
This conglomerate holds some of the most expensive stocks in the world and is also one of the biggest companies. The reason behind its popularity is also a famous man named Warren Buffet. The billionaire essentially bought up troubled businesses with his holding company and turned them around to create profits.
Some well-known subsidiaries of Berkshire Hathaway are Dairy Queen, Duracell, Fruit of the Loom, and many more, amounting to its total value at the market capitalization of 624 billion US dollars.
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