The age of the smartphone essentially belongs to Apple (NASDAQ: AAPL). When founder and former CEO Steve Jobs took the stage in 2007 to present the iPhone, it was likely that even he did not know how influential the device would soon become. The following year, the company launched the App Store, which created an entirely new ecosystem and sales channel that now earns $ 50 billion a year on its own.
It was an equally successful race for investors, as the company is now traded with a market capitalization in excess of $ 2 trillion. Obviously, the action has made investors a lot of money over the past decade and created several millionaires in the process. But how much did you have to invest a decade ago to be a millionaire today?
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Looking back on Apple’s last decade
Although Apple is firmly the most valuable company in the United States today, it was not so at the end of 2010. The honor at the time was for ExxonMobil with Apple claiming second place, but it was short-lived. Driven by sales of the iPhone 4S launched in late 2011, Apple overtook Exxon the following year and now has a market capitalization ten times that of the oil company.
Assuming reinvested dividends, Apple shares have provided investors with a gain of approximately 1,200%, or 29.2% per annum, over the past decade. Including the original investment, if you had invested $ 77,000 at the price adjusted by the $ 11.50 split a decade ago, your total investment would be worth approximately $ 1 million at today’s prices.
There are reasons to believe that Apple will not stop anytime soon. Led by current CEO Tim Cook, the company’s new strategy of monetizing its huge user base with a high margin of subscription-based revenue is paying off. Expect this to continue: the company’s service package dubbed the Apple One was launched on October 30 and will begin appearing in the income statement.
In addition, Apple may increase revenue for its important iPhone category. Although the growth of the iPhone has slowed in recent years, this trend may be reversed in the current update cycle. Recent reports are that the company asked for a production increase of almost 30% in the first half of next year, presumably based on the increase in popularity of the new iPhone 5G compatible model.
The hardest thing to do on an investment is usually nothing
It is hard to imagine now, but Apple’s incredible decade has not been a straight path. In fact, there were periods when the company’s performance was lower. During the past 10 years, the stock has suffered a maximum reduction of 46%, which is measured as the lowest value of its peak value. Still, long-term investors were rewarded.
The most successful investors are those who are comfortable with discomfort, because often the most difficult thing to invest is nothing. However, there is a significant correlation between the time you own an action and your likelihood of success. Long-term investors who find high quality companies that are redefining their space will be rewarded.