Given how large Apple is today, at a market cap of $2.3 trillion, it may not be surprising that having invested in Apple stock (AAPL) – Get Free Report at the right time would have produced gigantic returns that are hard to grasp.
Today, I talk about how someone could have turned $1,000 invested about 40 years ago into a whopping $3.7 million today by betting on AAPL early enough.
Figure 1: Apple Stock, Up 370,000%? Yes, It Has Happened
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Read also: How Apple’s Supply Chain Has Transformed Since 2019
Apple Stock Since The IPO
Apple Inc. went public in December of 1980. At that point, each share of the Cupertino company’s equity was worth $22.
Today, Apple stock trades at about $140, a price that is only 536% higher than the nominal IPO price. Of course, there is something important missing here: stock splits.
Since 1980, Apple has split its stock five times. The most recent split happened in 2020, when one share of AAPL became four – or, more technically accurate, when the holder of each share received a stock dividend of three extra shares.
Although AAPL IPO’d at $22, the stock’s split-adjusted price in 1980 is only 10 cents. Therefore, an Apple investor that bought shares at the IPO price would have captured gains of 140,000% over time – the formula is $140 per share today divided by 10 cents, minus 1.
1982: The Sweet Spot To Buy Apple Stock
Although Apple is a highly successful tech and consumer product company today, it was far from being one in the early 1980s. To be clear, Steve Job’s “baby” was a hot startup at the time. Still, the $7.8 million in revenues in fiscal 1978 pale in comparison to today’s $394 billion.
Just like most other small companies, Apple’s equity value did not climb uninterruptedly in the few years that followed the IPO. In fact, the Cupertino company faced a recession right out of the gate, in 1980-1982, a period when the US stock market dipped about 20% from the peak.
Apple stock IPO’d at a split-adjusted $0.10 and quickly reached a peak of $0.125 within a few days as a public company. But a mere 18 months later, AAPL had already corrected as much as 65% from the all-time high.
It was then, in July 1982, that a visionary, lucky and patient investor could have made a fortune. Had he or she bought shares at the split-adjusted low of 3.8 cents and held them until today, the cumulative unrealized gains would have reached (are you ready?) 373,883%!
That is to say: $1,000 invested in AAPL in July 1982, a sum of money that represents an inflation-adjusted $3,057 today, would have been worth north of $3.7 million now. Not bad!
Apple Stock’s Best Annualized Gain
While 373,000%-plus sounds like an outstanding return, it still represents annualized gains of “only” 22.6% over the past 40 years.
While this is a very high number compared to what an investor can expect to make investing in the S&P 500, AAPL’s best historical annualized gains would have been earned on an investment made much more recently.
Investors that bought Apple stock on January 3, 2019 at $34.31 and held on to the position would have made nearly 44% per year since then. This is the highest annualized return that a current AAPL shareholder could have ever made (see graph below, pink is the S&P 500).
Figure 2: AAPL vs. SPY since Jan, 2019.
Ask Twitter
Pop quiz: if you could have timed an investment in Apple stock perfectly, you would have turned $1,000 into $3.7 million today! Guess when you would have had to make this bet? Check out the answer at TheStreet.com/Apple.
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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting the Apple Maven)
