Apple Inc.’s (AAPL) shares closed above $700 for the first time Tuesday after a record number of preorders for the new iPhone 5 hinted at strong demand for the company’s flagship smartphone this weekend.
The Cupertino, Calif., company passed the intraday price milestone early Tuesday after its Monday news release reported more than two million online preorders for the iPhone 5 on the first day customers were able to reserve one–double the number reported for its predecessor, the iPhone 4S.
“This was despite somewhat lukewarm reviews and some claiming it had ‘lack of a wow factor,'” Stern Agee analyst Shaw Wu wrote. “We continue to believe many underestimate iPhone 5 in that it is a significant update and will drive a powerful product cycle.”
Apple’s stock wavered just below $700 Monday but didn’t pierce that psychological threshold until it entered after-hours trading. The move to $700 came six months after the stock crossed $600 and seven months after it passed $500.
Shares closed $2.13 higher at $701.91 Tuesday after going as high as $702.33, lifting the company’s value to $658.4 billion.
Last month, Apple became the most valuable U.S. company ever with a $623.5 billion market capitalization, topping previous record holder Microsoft Corp. (MSFT), which was valued at $616.3 billion in December 1999.
Despite the recent stock run-up, Apple shares still can be considered cheaper than a few years ago by some metrics.
While Apple’s stock has more than doubled since October 2010, its earnings are expected to nearly triple between then and the end of its fiscal year this month. Those surging profits have actually lowered Apple’s price-to-earnings valuation–a widely used measure to determine how “expensive” a company’s stock is–compared with its level earlier this decade.
The iPhone has been vital to that rapid profit growth, contributing more to Apple’s top line in recent years than any other device. Analysts expect customers to snap up as many as 10 million iPhone 5s from Friday through Sunday, a performance that would eclipse the four million iPhone 4S handsets sold during its opening weekend last year.
Source: Dow Jones