Since the early 00s, Apple stock prices have continued to rise to record levels. In this time, most of us have purchased or used one of their products in our day to day lives, shelling out hundreds if not thousands at a time. British holiday travel money site comparecurrency.com, decided to investigate how much you could have made by investing in Apple stock instead of buying their products.
One of the most iconic products for Apple during this time, which kickstarted the incredible growth, was the early generations of the iPod. The stock price at this time was just over $1 which is an absolute steal considering Apple’s value in today’s market.
The graphic below shows how much could have been made by using the money needed to purchase the original generation iPods, to purchase Apple stock instead of buying the product. The results are staggering!
Reputed short-seller Spruce Point Capital Management released its latest short report this week. The firm is shorting Canadian dairy and grocery manufacturer Saputo. Spruce Point chief Ben Axler believes the company is entering a phase of declining growth and highlights the financial stress and growing challenges he sees it facing, not only in Canada but Read More
Let’s take a more detailed look at those numbers. Investing £429, the UK price for the 1st generation iPod, would have been able to purchase stock worth an incredible £53,168 at today’s stock price. This is still rising and since this data was collected, the stock value has risen from 149.69 to 161.22 at the time of writing this article.
The largest increase came slightly later, with the release of the 3rd generation iPod. Despite this being released at a slightly cheaper initial price (£399), because of the slight dip in stock price at this time, coupled with the strength of the British pound to the US dollar, that stock would be worth a mind boggling £72,661 in 2017. Realistically, no one is likely to have made this trade off, and even less likely to have bought each of the first five generations of iPod. However, if they had used this method on all five devices and purchased stock, that person would now be sat on a total of £202,629 worth of stock at the time this data was collected.
Would this have worked for other companies?
Now hindsight is 20/20 and as with most trading, it is very easy to say what would have been worth investing in from the past. So which companies could a similar model of selecting stocks to invest in rather than buy that product work?
Another stock which has enjoyed a similar rise in the same timeframe as Apple has been McDonalds. Comparecurrency had a look at this stock in a similar comparison. Since 2003, the McDonalds stock price has increased significantly from $12.82 to today’s price of $158.20. However, there are a couple of key differences when looking at the value gained from buying the McDonalds stock compared with Apple, against buying the products each company makes. Firstly, the product price for a Big Mac compared to an iPod is obviously much cheaper, therefore the buying power of trading your food for stock is much less. Despite McDonalds being a more regular purchase for the average consumer, this increased purchase volume does not make up for the difference in price. Secondly, the initial price of the McDonalds stock ($12.82), while still relatively low, was much greater than the Apple stock of around $1. Even consistently buying the stock, instead of buying a Big Mac, at the UK customers average of 1 per 11 days, yielded a share value of £4260 from a total outlay of £1220. While this is a decent gain for a small investment, it pales in comparison to Apple.
Overall this is more of a fun way to look at the value of the products we buy rather than an investment strategy. However, it may be worth thinking twice about the opportunity cost of your next purchase and dream of ‘What if?’
Full data and sources can be found here.
James is an executive at UK currency and travel money comparison site comparecurrency.com. He enjoys investigating currency anomalies worldwide, as well as other interesting money related data.