There’s a sexy story up on MarketWatch about Apple’s market cap finally growing larger than Microsoft’s, to become the second biggest company in the S&P 500.
After much discussion about whether the report was true or not, it appears this is true only because of the way the S&P calculates market capitalizations.
As a correction to MarketWatch’s story notes, S&P uses “float-adjusted” market caps in its index.
According to a S&P document, “float adjustment excludes shares that are closely held by control groups, other publicly traded companies or government agencies.”
The goal is to “distinguish strategic shareholders, whose holdings depend on concerns such as maintaining control rather than the economic fortunes of the company, from those holders whose investments depend on the stock’s price and their evaluation of the company’s future prospects.”
So it’s not a complete picture of the companies’ market caps, but rather a specific one that focuses on the most liquid portions of their market caps.
According to MarketWatch, “Apple’s float-adjusted market cap reached $241.5 billion, surpassing Microsoft Corp.’s index market value of $239.5 billion, said Standard & Poor’s.”
But MarketWatch’s own financial tools show that Microsoft’s FULL market cap of $275 billion is still significantly bigger than Apple’s.
Here’s a chart from March showing how close Apple is getting to Microsoft. It’s certainly possible that Apple will pass Microsoft in overall market cap soon, but it has not yet.
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