Is market cap relevant?

It’s not that often that I see an article that’s stupid enough to rekindle my long dead Apple fanboi soul. Today I saw one (click here  to read it all), whose the money quote is this:

Now if you are the largest company in the world, wouldn’t you have the revenue to back up your argument?  Exxon and Walmart crush Apple in revenue and income, does market cap trump revenue and net income? People talk about Apple’s share price. If Exxon or Walmart wanted to, they could do a reverse split today, and have a share price above Apple’s.

I’d argue Revenue is meaningless when compared to Income, and while Exxon has larger Net Income than Apple (but by no means “crush” it), Apple has TWICE the net income of Wal-Mart.

And, mr. Rego, you know another thing that excites investors? it’s GROWTH! Perhaps you have forgotten this little word, but Apple’s net this year was twice the amount of last year; which may explain why all those ‘stupid’ investors are willing to pay 17 times trailing earnings for AAPL vs. the 10 and 13 times they are willing to pay for XOM or WMT.


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