- Amazon just followed in Apple’s footsteps as the second company to hit the $1 trillion landmark in market capitalization.
- When comparing the two companies’ stocks and earnings, they are each valuable to investors — but in very different ways.
- Amazon’s current price is over $2,000 per share.
Amazon (Nasdaq: AMZN) just became the second company to hit $1 trillion in market capitalization, just five weeks after Apple hit the milestone. Each company took a different road to get to the pinnacle of valuation.
Amazon reached the $1T mark by diversification and acquisition. After conquering the retail consumer goods segment, the company took aim at the grocery industry by purchasing Whole Foods Market. It has brought its reputation for fast, inexpensive delivery to that segment, offering two-hour delivery of groceries in many locations.
Apple, the first company to reach $1T in market cap, has done so primarily by continuing to expand and develop its own products. In 2014, the company acquired Beats Electronics LLC for $3 billion, but that was an anomaly for the tech giant.
Apple has been a public company for nearly 38 years, whereas Amazon took just 21 years to reach the same point. When Amazon began trading publicly on May 15, 1997, the stock was priced at a split-adjusted $1.50. Its current price is over $2,000 per share.
Invest Now: 10 Stocks That Could Be the Next Apple or Amazon
Acquisitions or Buybacks?
Apple stock pays a quarterly dividend, which, if reinvested, can increase a shareholder’s stake in the tech giant. The last dividend, paid on Aug. 16, 2018, was $0.73 per share. Apple also makes it a practice to buy back shares of its own stock, effectively increasing shareholder value by reducing the number of shares in the market. Apple repurchased $43.5 billion of stock in the first six months of 2018, according to the New York Times. Amazon does not pay dividends and has not bought back any stock in the past six years. Typically, a company will buy back shares when it feels that is the best use of its excess cash. Other companies will use the cash for acquisitions.
Amazon is a strong stock for those investors who like to see the price of their stock increase steadily, whereas Apple might be the best choice for people who want to see their investment grow, or investors who want to receive a quarterly dividend.
Click to keep reading about Apple and 14 other stocks Warren Buffett is investing a ton of money in.
More on Making Money and Business