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After Apple’s very good June quarter results and better than expected September quarter guidance, many investors are seeing Apple’s market capitalization cross the $1 trillion mark. There are two share counts that can be used to calculate the company’s market cap, which creates about a $2 difference in making this hurdle.
When a company reports its financial results, it provides basic and diluted share counts. The basic share count is how many shares are owned by investors. The diluted share count includes the additional number of shares that there would be if all the in the money stock options, restricted stock and convertible debt were exercised. When the diluted share count is used to calculate the $1 trillion mark, it lowers the price Apple’s shares need to hit, since there are a greater number of shares in the calculation.
Another wrinkle, especially in Apple’s case since it is buying back a lot of stock, is that when it releases its 10-Q and 10-K filings it updates the number of basic or what is called issued and outstanding shares. With a lower share count, it raises the price the stock has to reach to hit $1 trillion.
The 10-Q share count calculates to a $207.05 stock price
Apple released its June quarter 10-Q on August 1, the day after earnings (it has been doing this for a number of years).
- Market cap of $1 Trillion
- Share count as of July 20 per the 10-Q was 4,829,926,000 shares
- Share price of $207.05 to clear $1 trillion
Including the diluted shares equates to a $205.16 share price
When Apple reported its June quarter results, the difference between the basic and diluted share counts is the additional number of shares that could eventually be owned by investors. Taking this into account lowers the threshold to hit $1 trillion.
- Market cap of $1 trillion
- Share count as of July 20 per the 10-Q was 4,829,926,000 shares
- Add 44,442,000 diluted shares from the June quarter results
- Total share count of 4,874,368,000
- Share price of $205.16 to clear $1 trillion
Apple’s shares hit a high of $207.05 very briefly this morning and have pulled back a very small amount to just above $206. It hit $1 trillion intra-day using the basic share count and is still above it using the diluted share count. The next step is to close above $207.05 to answer any questions about achieving this milestone .
