Tim Cook succeeded Steve Jobs Apple‘S (NASDAQ:AAPL) CEO on August 24, 2011. Just six weeks later, Jobs died of pancreatic cancer. At the time, many investors viewed Jobs’ death as the end of an era.
Jobs returned to Apple on September 16, 1997 – exactly twelve years after he was kicked out of the company he co-founded – and revived the flagging business with iMac, iPod, iPhone and iPad. Under Jobs, Apple revolutionized the PC, MP3 player, smartphone and tablet computer markets with its elegantly designed and easy-to-use products.
From fiscal year 1997 to fiscal year 2011 (ended in September 2011), Apple’s annual revenue increased at a compound annual growth rate (CAGR) of 22%, from $7.1 billion to $108.3 billion. From Jobs’ first day back to Cook’s ascension to CEO, Apple stock rose 6,760%. A modest $2,000 investment would have grown to $137,200.
It was tempting to part ways with Apple after Jobs handed the reins to Cook, who was best known for increasing the company’s production capacity rather than developing its hardware products, but that would have been a huge mistake.
Why did Apple continue to thrive under Tim Cook?
Since Cook’s first day as permanent CEO, Apple shares have risen 1,150%. After reinvesting dividends that Cook reinstated in 2012, the company also achieved a total return of 1,380%. The $2,000 investment on Jobs’ first day back at Apple would have continued to grow to $2.03 million under Cook’s watch after including reinvested dividends.
Even if you didn’t buy Apple stock during Jobs’ tenure, you still could have made a lot of money betting on Tim Cook’s ability to expand the company. If you had simply invested $2,000 in Apple the day Cook took over and reinvested your dividends, your investment would be worth more than $20,000 today.
From fiscal 2011 to fiscal 2023, Apple’s revenue grew at a CAGR of 11% to $383.3 billion. Most of that growth came from the iPhone, which still accounted for over half of its sales in fiscal 2023. Additionally, the company grew its earnings per share (EPS) at a CAGR of 16% as it repurchased more than 40% of its shares .
Under Cook, Apple launched new hardware products such as the Apple Watch, AirPods, HomePod and Vision Pro. But only two (the Apple Watch and the AirPods) were considered hit products. HomePod has struggled to gain traction Amazon in the smart speaker market, and the Vision Pro remains an expensive, niche device for early adopters. Apple also recently abandoned plans to build an electric car after pouring billions of dollars into the secretive project for a decade.
It’s a mixed track record, but Cook also directed Apple to expand its services business with new subscription-based services like Apple Music, Apple TV+ and Apple Arcade. The ecosystem – which also houses the App Store and the iCloud platform – now serves over one billion paid subscribers. Apple generated more than a fifth of its revenue from these services in fiscal 2023 and could retain more of its users, curb its long-term dependence on the iPhone and challenge companies like these Netflix And Spotify in the growing streaming media market.
Does Apple still have room to maneuver?
Apple may not be pulling as many rabbits out of the hat as it did every few years under Steve Jobs, but the company is still expanding, making a lot of money, and returning much of that money to its investors through buybacks and dividends. Plus, it’s still one of the few consumer electronics brands that can also be considered a true luxury brand.
Apple ended last quarter with $173 billion in cash and marketable securities, so the company still has plenty of opportunities to expand its ecosystem through major investments and acquisitions. That’s probably why Warren Buffett continues to provide more than 40% of it Berkshire Hathaway‘s entire portfolio at Apple.
Apple shares have fallen more than 10% this year as investors fret about declining iPhone sales in China, regulatory headwinds for the App Store, the lackluster launch of the Vision Pro and the abrupt end to its electric vehicle dreams To worry.
But in the long run, Apple’s business is likely to rebound as the company launches new hardware products, expands its services ecosystem, and rewards its patient investors with higher dividends and buybacks. So before you decide to give up on Apple, consider what happened to the investors who hastily sold their shares when Tim Cook took over the company nearly 13 years ago.
Should you invest $1,000 in Apple now?
Before buying Apple shares, consider the following:
The Motley Fool Stock Advisor The analyst team has just identified what they think this is The 10 best stocks so investors can buy it now… and Apple wasn’t one of them. The ten stocks that made the cut could deliver huge returns in the years to come.
Stock Advisor provides investors with an easy-to-follow roadmap to success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks per month. The Stock Advisor The service has more than tripled the returns of the S&P 500 since 2002*.
Check out the 10 stocks
*Stock Advisor returns from April 8, 2024
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Leo Sun has positions at Amazon and Apple. The Motley Fool has positions in and recommends Amazon, Apple, Berkshire Hathaway, Netflix and Spotify Technology. The Motley Fool has a disclosure policy.
If You Invested $2,000 in Apple in 2011 This Is How Much You Would Have Today was originally published by The Motley Fool