The value of a company’s intangible assets, such as intellectual know-how, copyrights, reputation, consumer data and branding, aren’t always easy to pin down.
Globally, the value of these assets has ballooned along with the internet, and the growth of this digital economy has dramatically changed the way companies are valued: Value is increasingly derived from digital platforms, software and other intangible investments rather than physical assets like real estate, oil wells or other capital.
This growth has intensified this year as the pandemic has shifted interactions from in-person to virtual. Zoom Video Communications (ZM) - Get Zoom Video Communications, Inc. Class A Report is an example of a business that benefited from the COVID-19 pandemic.
Each year, Brand Finance, a business valuation and strategy consultancy, analyzes the fluctuating value of intangible assets on world stock markets. Besides the scale of global intangible assets, other critical trends have emerged over the past 19 years, including the volatility of these asset values, and the confusion created by some intangible assets appearing in balance sheets while most do not.
The phenomenon of "undisclosed intangibles" has arisen, according to Brand Finance, because accounting standards do not recognize intangible assets unless there has been a transaction to support intangible asset values in the balance sheet.
Every year, Brand Finance ranks the world’s most intangible companies and those with the highest levels of intangible asset disclosure. By their very nature, digital companies are heavily reliant on intangible assets. This year, Apple (AAPL) - Get Apple Inc. Report has overtaken Amazon (AMZN) - Get Amazon.com, Inc. Report and Microsoft (MSFT) - Get Microsoft Corporation Report to become the company with the highest total intangible value, at $2.15 trillion. All of Apple’s intangibles remain undisclosed, Brand Finance says. Pharma and healthcare companies also feature heavily in the ranking.
Apple, Amazon and Microsoft all are part of Jim Cramer's Action Alerts Plus investor club portfolio.
Based on Brand Finance’s 2020 Global Intangible Finance Tracker, these are the companies with the most intangible value.