Friday, January 25, 2013
Exxon passes Apple
Exxon has recently passed Apple as the most valuable company resulting from the slipping of Apple's stock price. Apple's stock fell 2.6 percent to $438.76 in afternoon trading Friday for a market capitalization of $412 billion. That followed a 12 percent drop on Thursday, the biggest one-day percentage drop for the company since 2008. Exxon Mobil Corp. gained 10 cents Friday to $91.45 for a market capitalization of $417 billion. Back in the summer of 2011, Apple surpassed Exxon after the oil company had held the top spot since 2005, followed by the two continually trading places. Recently, Apple's stock peaked at $705.07 after the release of the iPhone 5. However, Apple warned that its rapid revenue growth was slowing down immensely compared to the steady trading of Exxon and its oil with a solid base of support from energy sources. Experts believe this change is due to the fact of lack of new products and innovation from Apple which people have become accustomed to, which may be caused by the passing of Steve Jobs. This makes me wonder if Apple can expect the same success as years passed from just releasing updated versions of old products.
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One can argue that Apple has been digging its own grave by setting itself as the technology innovator of our generation. The power of investor expectations showed itself this week by shredding away 12% of the share price. We all expect so much from Apple, even as consumers. They produce the highest quality product in the industry, and if they don't blow us away, we feel the need to be very disappointed.
ReplyDeleteI agree with you, Mainza. Apple has definitely achieved great success in the market, but many wonder if this success will continue to grow or if they will just stabilize? As consumers, we look to Apple as innovators producing the latest and greatest in technology, however this past weeks slip in share price doesn't reflect this social attitude. There is no doubt that Apple will continue to lead our generation, it is just a question of how many other companies will try to tap into this market as well.
DeleteThis Doesn't surprise me at all. The oil industry takes massive capita to expand and function. To drill one single oil well in a new area it takes a massive amount of engineering power, planning, and even more capita, in the end of the day the profit relative to the amount of investment is not much in percentage terms. However the amount of investment is so huge that the profits despite being small in percentage terms are still enormous, which leads to a kind of cycle in which the biggest companies with the deepest pockets keep getting bigger and bigger and also deal with low risks. This leads to steady growth in the sector, with Exxon being the leader since it's the biggest and richest company. The technology industry is the exact opposite however. Technology industry has huge profits compared to the investment done in it. Pay out is huge but being the market leader in technology means having innovation at all times and having cutting edge technology compared to the rest of the market at all times and that is almost impossible to achieve over the long run.
ReplyDeleteI can agree with Ashkan's comment. It takes a lot of resources for the oil companies to even start the process of drilling. Exxon can relate to Apple in the fact that when it comes to setting up a price for their goods and services they can charge just about anything because the price for oil and apple products can be inelastic at times to their costumers. Many consumers respect the Apple name greatly so they will continue to go out there and buy their new products even if it seems a bit overpriced.
ReplyDeleteI agree with all of these points and also i see that exxon has many less substitues than the ipod. We see pc's and other phones and music devices that can be used for the same purposes as the apple products they create. Where exxon has a market on lock because there are no real substitues for oil and there isnt as much competition to create new energy.
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