Apple’s $3tn valuation is not as ridiculous as it seems | Nils Pratley

The diversified technology giant generated revenues of $1bn a day in its last financial year

The striking part about Apple's $3tn valuation is that it does not look obviously wrong. Or, rather, it does not appear out of line with the racy values the US stock market places on technology companies. There is no need, for example, to engage in heroic horizon-gazing projections, as with $1.2tn Tesla, to support the enormous number. One can roughly get to $3tn at Apple via conventional yardsticks such as revenues, profits and cash generation.

The company generated revenues of $366bn in its last financial year that ended in September - $1bn a day - and made profits of $94.7bn. So the shares are being rated at slightly more than 30 times last year's earnings. That's punchy, but not wildly so given the rate of revenue growth (one third last year) and the fact that all the profits find their way to investors these days, largely through share buy-backs.