In August 2011, news broke out, letting everyone know that Apple was now the most valuable publicly traded company globally.
It was after unseating Aramco, the oil giant.
Apple, at the time, reported groundbreaking earnings from the previous quarter, with revenues going up by 90% after selling 20.34 million iPhones and 9.25 million iPads, surging its profits to 124%.
Earlier in 2022, the multinational tech company boasted a $3 trillion market value, around $1 trillion more than Aramco.
It was the first firm to hit such high market value. In April, things took a turn because Apple's shares had fallen by almost 20% while Aramco had risen by 28%.
Apple is said to have sustained around 19% losses reducing its share price to $146, which was the lowest number since November 2021.
When the fortunes changed, there was also a shift in position regarding the globe's most valuable company.
A Financial Times report in January 2022 revealed some not-so-good news for Apple lovers and shareholders globally. It stated Apple was dethroned as the most valuable firm in the world.
The crown was taken by Saudi Aramco, the world's largest crude oil exporter. It is an organization that is also billed as the largest oil-producing firm.
The company, previously ranked 4th on the list of most valuable companies in 2021, is majorly owned by the Kingdom of Saudi Arabia.
The rising demand for oil and increasing costs largely contribute to increasing oil companies' shares. The oil firm was also reclaiming a position it lost to the iPhone maker in 2020.
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Look at some factors that have helped Apple enjoy global success for years.
- Continuously Improving On Products. Apple constantly introduces generation after generation of the same product by making improvements to earlier versions. It also helps that the firm has loyal clients always looking forward to the latest release.
- Creating Innovative Products. The firm is renowned for adding pioneering items to its product arsenal. These include the iPod, iPhone, iPad, and many more. These enable the firm to record high-profit margins year after year.
Now that you briefly know why Apple is constantly at the top check out some factors that contributed to Apple losing the number one position.
Supply Shortages and Covid-Related Breakdowns
Tim Cook, the Chief Executive of Apple, blamed covid-related breakdowns and shortages of supplies for the slip in position.
He said these cost the organization no less than $ 8 billion in a single quarter. He was also confident that Apple could quickly retake its position after solving the supply chain issues.
The firm said that it was struggling to source chips and other key tech components crucial for making modern products to meet market demand.
It also had to deal with factory shutdowns in China that were in charge of making iPhones and its other products.
Supply issues were primarily focused on a corridor in Shanghai, China.
Cook stated that most of the Chinese factories responsible for the final assembly of the company's product had re-started after the COVID shutdowns, which was great news because it implied the chip shortage would end.
He hoped that the COVID problems would get better with time.
Apple is also facing challenges that other tech companies are grappling with post-covid.
After thriving in the pandemic-driven boom, it's becoming harder to deliver the same levels of immense growth that drove share prices to the roof.
As economies start to slowly but steadily recover from the effects of the pandemic, it's becoming tougher.
Investor Changing Patterns
Another factor contributing to Apple's shares falling is that some investors opt to dispose of shares in tech companies and cryptocurrency for less risky assets.
The move was prompted by the decision by central banks to increase interest rates to offset the impact of rising prices.
It's interesting to note that Apple's demotion to second place as the most valuable company came two weeks after the firm announced its $97.3 billion revenue for the second quarter, a new record it had set for the month of March.
Reports show that the company grew across its Mac, iPhone, Wearables, and Services product categories.
The iPad revenue, however, experienced a decline in revenue of about 2% compared to the quarter in the previous year.
The War in Ukraine
As per Reuters, the war in Ukraine may have also contributed to a dent in sales and growth for Apple.
In an interview, Luca Maestri had previously warned that the war might lead to the closure of the firm's store in Russia, cutting sales tremendously.
It is because Apple considers the country an engine for expansion.
Do you want to know why Apple is no longer the most valuable company in the world? Check out the article for a few reasons the tech giant was dethroned.