As per a Brand Finance report, value of intangible assets of the world’s most valuable companies has jumped to $10.8 trillion as of September 1. During the COVID-19 crash, this value had dropped by $1 trillion. The top 10 valuable companies in terms of intangible assets are: Apple, Amazon, Aramco, Microsoft, Alphabet, Facebook, Alibaba, Tencent, Tesla, and VISA, respectively. These companies have the ability to differentiate themselves with limited physical assets, defending price and demand, with 32 internet and software and technology & IT companies included in the top 100 ranking of companies with the highest total intangible value.
A few apparel and cosmetics companies made it to the list this year. LVMH Moët Hennessy Louis Vuitton was ranked 31st. The Paris-based luxury goods conglomerate – which owns over 70 luxury brands, including Louis Vuitton, Dior, Celine, Givenchy, and Loewe – has a total intangible value $233 billion, according to Brand Finance’s calculations, with that total intangible value accounting for 88 percent of the company’s overall enterprise value.
At the same time, Brand Finance notes cosmetics, pharma and healthcare companies continue to be highly intangible, due to the combined impact of branding and technology, which play a critical role in value-generation for these industries.
Nike ranks 49th with a total intangible value of $172 billion, which represents 94 per cent of the company’s enterprise value, and cosmetics giant L’Oreal is at number 55th spot (down from 53rd last year). Its total intangible value reached $166 billion this year, which is 90 percent of its enterprise value.
Brand Finance states the enormous volatility not just in the market but more specifically in terms of the intangible value of the world’s biggest companies suggests fundamental flaws in investor understanding of company assets. The London-based business valuation consultancy asserts that most investors do not fully understand the underlying value of the companies they invest in, leaving room for wildly fluctuating share prices and mass panic.