Apple Inc. Common Stock: A Micro-cap Stock in the Primary Market

In the world of investing, the term "micro-cap stock" often evokes images of small, emerging companies with high potential but also high risk. However, when it comes to Apple Inc. (AAPL), the term "micro-cap stock" might not be the first that comes to mind. This article delves into the unique position of Apple's common stock in the primary market and why it's often categorized as a micro-cap stock, despite its towering status in the tech industry.

Understanding Micro-cap Stocks

Micro-cap stocks are typically defined as those with a market capitalization of less than $300 million. These companies are often in the early stages of their development and are not as well-known or established as larger, more mainstream corporations. They tend to be riskier investments due to their smaller size and less diversified revenue streams.

Apple Inc. and the Micro-cap Label

So, how does Apple fit into this category? On the surface, it seems counterintuitive. After all, Apple is one of the most valuable companies in the world, with a market capitalization that has exceeded $2 trillion at various points. However, the micro-cap label is not about the current market capitalization but rather the potential for significant growth.

Apple's Growth Story

Apple's journey from a small computer company to a global tech giant is a testament to its potential for growth. When the company went public in 1980, its market capitalization was just $1.2 billion. Over the years, Apple has consistently innovated and expanded its product line, from computers to smartphones, tablets, and wearables. This growth has been a key driver of its stock price, making it a prime candidate for the micro-cap label.

The Primary Market and Apple's Stock

The primary market is where companies issue new shares of stock to the public for the first time. When Apple went public in 1980, it was a micro-cap stock in the primary market. However, the company's success and growth have propelled it to the status of a blue-chip stock, which is a term used for large, well-established companies with stable earnings and low risk.

Case Study: Apple's Stock Performance

To illustrate the potential of micro-cap stocks, let's look at Apple's stock performance since its initial public offering. In 1980, the stock was priced at 22 per share. As of 2021, the stock price had surged to over 130. This represents an annualized return of over 15%, which is significantly higher than the stock market's average return over the same period.

Conclusion

While Apple Inc. may not fit the traditional definition of a micro-cap stock, its journey from a small company to a global giant is a compelling example of the potential for growth in the primary market. As investors, it's important to look beyond the current market capitalization and consider the potential for significant growth when evaluating stocks.