Apple (AAPL -1.07%) was founded in 1976, and in just four short years it went from a humble start-up with a dream of producing personal computers to a publicly listed company. Today, it's the most valuable listed company in America, with a market capitalization of $2 trillion.
It even has the support of Warren Buffett, who is widely regarded as one of the best investors in history. Apple is the largest single stock holding for his conglomerate, Berkshire Hathaway, which now owns a position worth approximately $115 billion.
But interestingly, Berkshire Hathaway only made its first purchase in 2016, once the company was already a raging success.
Early investors who bought stock in Apple's initial public offering (IPO) 42 years ago would be sitting on life-changing amounts of money today, even with an outlay as small as $1,000.
Unlike Berkshire Hathaway, those investors had to sit through some very rocky periods in Apple's history. But they've certainly been rewarded for their patience, and here's by exactly how much.
Apple has a relentless focus on excellence
Apple is a quintessential consumer products company. Unlike some of its competitors that have branched out into other businesses (think Microsoft, for example), Apple has maintained a laser focus on delivering the highest-quality products and services to its customers.
But when a company puts all of its eggs in one basket, mistakes can be costly, and it hasn't always been smooth sailing at Apple. Late co-founder Steve Jobs was ousted in 1985 after some of the company's new products didn't live up to expectations. Then, after returning in 1997, Jobs said the organization was just 90 days from bankruptcy because it was being crushed in a personal computing industry that had become extremely competitive.
But Apple pulled through, and then truly began to thrive following the 2001 release of the iPod, followed in 2007 by its iPhone, which changed the mobile industry forever.It's estimated that more than 2.2 billion iPhones have been sold since then, and Apple has created more red-hot products on the back of its success like the AirPods wireless headphones and the Apple Watch.
Plus, because the iPhone is now so widely distributed, Apple was able to build a lucrative services business as well. It includes subscription-based essentials like Apple Music, iCloud, and Apple News, and also emerging financial technologies like Apple Pay.
Apple has become a financial juggernaut
In 1980, the year Apple went public, it generated $117 million in sales. By 1990, that figure had grown 50-fold to $5.5 billion. As the below chart shows, the company never looked back.
Apple is also a cash-generating machine. Between fiscal 2016 -- when Berkshire first invested -- and fiscal 2022 (ended Sept. 24, 2022), the company has delivered $460 billion in net income (profit). But Buffett is also known to love companies that return money to shareholders.
Apple began a share buyback program in fiscal 2013 to do just that, and it has since returned more than $550 billion to investors through that vehicle alone.
The value of $1,000 invested in Apple's IPO today
Apple completed its initial public offering on Dec. 12, 1980, at $22 per share. But the company has grown so valuable that management has conducted seven stock splits to reduce its share price, ensuring it remains accessible to smaller investors.
Investing $1,000 in Apple's IPO at $22 per share would've bought you 45 shares. But after adjusting for the stock splits, you'd actually have 10,080 shares now with a cost basis of $0.10 per share.
Since Apple stock trades at $126.36 today, that translates to a return of 126,360%.
In other words, that $1,000 investment in 1980 would be worth more than $1.26 million today! But that's not all, because Apple has paid a dividend in several years since 1987. Assuming you never sold a single share along the way, you would've collected an additional $155,131 in dividend payments!
To this day, you'd still be receiving $9,273 in dividends annually. That's 9 times your initial outlay of $1,000 paid into your pocket every single year. That's the power of long-term investing on full display.
If you've never owned Apple stock before, it's not too late. In fact, since it has declined by 30% from its all-time high, this is a rare opportunity to buy in at a steep discount. Plus, Buffett continued to buy shares as recently as mid-2022, so a purchase today would put you in great company.
Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, and Microsoft. The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway, long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway, short January 2023 $265 calls on Berkshire Hathaway, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
As a seasoned financial analyst and enthusiast with a deep understanding of the stock market, I can provide valuable insights into the concepts mentioned in the article about Apple's remarkable journey from a startup to a $2 trillion market capitalization company. My extensive knowledge is grounded in the financial history and strategies employed by successful investors like Warren Buffett.
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Apple's journey is marked by its focus on excellence and a relentless commitment to delivering high-quality products and services. The article recounts the challenges faced by Apple, including the temporary ousting of co-founder Steve Jobs in 1985 and the company's struggle in the personal computing industry. However, Apple's resilience and strategic decisions, such as the release of the iPod in 2001 and the iPhone in 2007, are highlighted as pivotal moments in its success.
The financial aspects discussed in the article demonstrate Apple's transformation into a financial juggernaut. It presents key financial metrics, such as the growth in sales from $117 million in 1980 to $5.5 billion in 1990 and the substantial net income of $460 billion between fiscal 2016 and fiscal 2022. The article also highlights Apple's cash-generating capabilities and its shareholder-friendly approach, including a significant share buyback program and the return of over $550 billion to investors.
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