Before beginning, the short answer is: Yes. What you see on the price tag is “The Price”.
Early this morning, I read one of my favorite writers, Jared A. Brock’s article “Apple Just Became a $3 Trillion Corporation. It’s Not Worth 1/10th That Much”. — Jared writes articles worth your time, and I recommend anyone to read him. — After reading his article I decided to write on this.
In the article, Jared, described some of Apple’s valuation by Math to show why Apple is not worth. In this particular stock, our stock valuation point is not The Math. The stock valuation is made by ultra-rich people like Warren Buffet, in which he made about $120 Billion from Apple’s market value.
The Math is not the correct way of deciding on the price tag of a Stock Asset. Mostly, the smart peoples who grown in capitalistic countries tend to make asset valuation decisions based on such a false believes that depend on Math or P/E ratio or any other reasonable math-based calculations.
In his article Jared, showed us, a commonly known false info that Warren Buffet likes to buy stocks with a P/E ratio around 12. — Even Buffet promotes his strategies that he prefers stocks about P/E ratio of 12, it does not mean it is a correct info. - If you think carefully, at the time Buffet acquired his $40 Billion purchase, Apple did not have that P/E ratio. Current P/E ratio of Apple is above 30, if P/E was the case, then Warren Buffet should realize his profit, but he does not. P/E ratio, like any math formula makes non-sense on the valuation.
Tax
Yes, company paying less tax is more favorable among rich investors. Less tax, not only means that company absorbs more resources from the society, also gains advantage over its tax paying competitors as well.
Does Tax explain the high evaluation only? No, labor is the next one.
Labor
As you dig more into global companies, they emerge in markets where labor is highly skilled and creative, like North American working class. Workers’ creativity gives competitive advantage to the companies that they work for in the global market. An average American Worker has inherited & gathered more time for intellectual affairs, resources like art, libraries, science and education from both their families and society; compared to any developing countries’ working class. So, in the end, their labor produces a competitive advantage that global companies like Apple benefit globally.
On the flipping side of the labor, there is a global cheap labor, in which products are produced. Due to the nature of production cost, and/or labor price arbitrage, global companies sell cheap labored products to the people (labors) in richer countries.
So, global companies get benefit from the price gap of both of the labor worlds (or human costs).
Networking
Of course, creating the connection between both labor markets, need financial resources, and political relations.
You know what, most of these financial resources are obtained via Government Funds of the (relatively) advanced nation — where the global company was founded -, so another cost to the (relatively) advanced society. Guess what! The cost of those politicians is also paid by taxpayers.
Politicians, not only of the (relatively) advanced nation, but the dictators of third world countries, as well. There is a bribery system, where money flows to the dictators (Of course, not directly by the global company itself but thru its permitted/licensed third-party business partners). Otherwise, why should the dictator simply open his beautiful countries’ beautiful market to a global company? That’s the cost on the shoulders of third world countries’ people (labor). As you search for the cost of products -like iPhone- globally, you find out many low-income developing countries’ people (or labor) pay more than a (relatively) advanced nations product price tag.
Monopolistic Power
Who on the earth decides a monopolistic products’ price tag? You? The Math? The Market? The CEO of that global giant? You got the point.
If a company has a global network for cheap labor, marketing/sales network on richer countries, distribution network on developing countries, has no serious legislative restrictions on to sell its products world-wide, which Math or ratio works for its stock valuation?
Evaluation limit is then merely depending on the cashable asset amount that ultra-riches -and their companies- eager to pay for. And their cashable assets depend on how fast the FED runs its printers.