Cryptocurrency should be Apple's future financial gambit, analyst says

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RBC Capital Markets believes that Apple starting a cryptocurrency exchange funded through buying Bitcoin could be a smarter move than producing an "Apple Car."

Credit: Apple
Credit: Apple


In a note to investors seen by Coindesk, RBC analyst Mitch Steves says that Apple could generate more than $40 billion from the cryptocurrency market and make the U.S. a leader in crypto over the next couple of decades.

The analyst posits that Apple would implement crypto exchange functionality in the Apple Pay Wallet app. By doing so, it could "immediately gain market share and disrupt the industry."

Steves draws a potential comparison to financial tech company Square, which currently operates in the bitcoin space.

"Apple's install base in 1.5B, and even if we assume only 200M users would transact, this is 6.66x larger than Square. Therefore, the potential revenue opportunity would be in excess of $40 billion a year (15% incremental top-line opportunity)," Steves writes.

The analyst claims that the "Apple Car" could be a good long-term opportunity for the Cupertino tech giant. However, he believes that competing with Elon Musk and Tesla could be riskier than simply opening an Apple-branded cryptocurrency exchange.

Steves believes that Apple's position as a dominant technology company could do away with many of the issues of existing cryptocurrency exchanges. The competition in the crypto industry is also "light," the analyst adds.

Apple establishing itself in the crypto market could also reduce the chances that the U.S. implements regulations to ban or curb bitcoin.

Tesla on Monday announced that it purchased $1.5 billion worth of bitcoin. Steves believes that a similar purchase from Apple could fund the development of an Apple cryptocurrency exchange and drive customers to the "Apple Exchange."

"For example, if [Apple] purchased $5 billion wroth of bitcoin (20-25 days of cash flow, the price of the underlying asset would need to rise by 10% for the firm to fully fund the entire project in the first place," Steves postulates. "This is a solid value proposition in our as the business would be funded without diluting any other projects at the firm."

RBC places a $171 price target on Apple, based on a 35x multiple to the company's 2022 earnings-per-share estimate of $4.92.
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Comments

  • Reply 1 of 58
    StrangeDaysStrangeDays Posts: 11,154member
    Yeah no...
    flyingdpmark fearingronnwilliamlondonmike1davgregjony0watto_cobra
  • Reply 2 of 58
    entropysentropys Posts: 2,880member
    Maybe make itself THE most trusted platform for cryptocurrency. Like it should have done with streaming services. 

    Facilitate the creators instead of taking over everything in one vast complex megacorp that will eventually be used for the personal whims of its corporate leadership.
    edited February 8 longpath
  • Reply 3 of 58
    lkrupplkrupp Posts: 8,999member
    Read the article about the guy who forgot his bitcoin wallet password and lost access to $250,000,000.00 worth of bitcoins. And he isn’t alone by any means. A day doesn’t go by in the Apple Discussion Forums without at least a dozen or more posts wanting to know how to circumvent Activation Lock. Can you imagine Apple getting blamed for users losing their fortunes in the Wallet App? 

    No, Apple, don’t do this!
    edited February 8 mark fearingflyingdpronnCyclistewilliamlondonasdasdstevenozjony0watto_cobra
  • Reply 4 of 58
    sflocalsflocal Posts: 5,517member
    Analysts should focus on doing their jobs instead of pushing out this crap.
    mark fearingStrangeDaysronnCyclisteanantksundarammike1jony0watto_cobra
  • Reply 5 of 58
    sflocalsflocal Posts: 5,517member
    lkrupp said:
    Read the article about the guy who forgot his bitcoin wallet password and lost access to $250,000,000.00 worth of bitcoins. And he isn’t alone by any means. A day doesn’t go by in the Apple Discussion Forums without at least a dozen or more posts wanting to know how to circumvent Activation Lock. Can you imagine Apple getting blamed for users losing their fortunes in the Wallet App? 

    No, Apple, don’t do this!
    I read that same story and this is why Bitcoin won't be the mainstream currency as people are making it out to be.  The security measures are to archaic that it just means that people will be lazy and forgetful and next thing you know, one's money is lost.
    ronnwatto_cobra
  • Reply 6 of 58
    Digital currencies are likely a fad where they are not being used for illegal maneuvers. To what degree they are legit - who knows. And they are going to come under way more scrutiny as time goes on for illegal use. I think it wise to steer clear until there is a clear path on how this grift plays out.
    ronnwilliamlondonwatto_cobra
  • Reply 7 of 58
    rcfarcfa Posts: 946member
    That would be the dumbest thing Apple could do: Bitcoin is fundamentally flawed.

    If they were doing anything like it, then with a different type of blockchain, like maybe etherum.
    And then they should get into smart contracts, too.
    longpathwatto_cobra
  • Reply 8 of 58
    crowleycrowley Posts: 7,630member
    Better fucking not be.
  • Reply 9 of 58
    DAalsethDAalseth Posts: 1,492member
    Bitcoin: Imaginary bags of nothing that you hold onto until you can find a bigger sucker to pay more that you paid. 
    No Apple should not get involved with this or any cryptocurrency. When Bitcoin first came out what was it ten years ago or so, I looked into this cool new thing. I was interested in maybe mining it for myself. It only took me a little bit of reaearch to see what a pile of s*** concept they were. 
    zimmieapplguyronnmuthuk_vanalingamGeorgeBMacstevenozjony0watto_cobra
  • Reply 10 of 58
    seanjseanj Posts: 209member
    Absolutely stupid idea. The reason why people have faith in national currencies is because there is a bank standing behind it, obligated to honour it; - the Federal Reserve for the US Dollar, the Bank of England for Sterling, etc.
    If Apple were to launch a crypto currency, or be closely associated with one, then people would believe rightly or wrongly that Apple would be liable for any losses they might incur from holding it. It could end up being be a public relations disaster for Apple, or worse, it could deliver a severe financial blow to the company.
    mike1watto_cobra
  • Reply 11 of 58
    entropys said:
    Maybe make itself THE most trusted platform for cryptocurrency. Like it should have done with streaming services. 

    Facilitate the creators instead of taking over everything in one vast complex megacorp that will eventually be used for the personal whims of its corporate leadership.
    Stocked up on tinfoil, I see.
    edited February 8 anantksundarammike1watto_cobra
  • Reply 12 of 58
    Who cares what this or analysts thinks?...
    If it isn’t based off of Apple’s corporate vision, which after reading ‘Steve Jobs’ biography by Walter Isaacson, I don’t remember ‘gambit’ being a concept that Apple aspires to.

    And looking at Apple’s track record, they appear to be a lot ‘smarter’ than any analyst.

    Or maybe click-bait discussion by association to put cryptocurrency into focus, is his goal?

    ...and we co-operated.
    edited February 8 watto_cobra
  • Reply 13 of 58
    Pure, unadulterated, made-up, speculative nonsense. Apple's a $2.3T company with ZERO receivables in Bitcoin. It got there with ZERO receivables in Bitcoin. 

    And it will/should stay that way. 
    muthuk_vanalingamasdasd9secondkox2jony0watto_cobra
  • Reply 14 of 58
    Developers should have the option of being paid in crypto.
  • Reply 15 of 58
    longpath said:
    Developers should have the option of being paid in crypto.
    (Legit) developers can take the cash, pay taxes, and buy crypto with what’s left, if they wish. Otherwise, they can refuse to ‘develop’ for Apple. 
    mike1asdasd9secondkox2watto_cobra
  • Reply 16 of 58
    At least they aren't recommending that Apple follow Tesla's lead and actually invest billions in Bitcoin.
    watto_cobra
  • Reply 17 of 58
    crowleycrowley Posts: 7,630member
    longpath said:
    Developers should have the option of being paid in crypto.
    Developers that ask should be responded with delisting.
    mike19secondkox2
  • Reply 18 of 58
    JWSCJWSC Posts: 881member
    sflocal said:
    lkrupp said:
    Read the article about the guy who forgot his bitcoin wallet password and lost access to $250,000,000.00 worth of bitcoins. And he isn’t alone by any means. A day doesn’t go by in the Apple Discussion Forums without at least a dozen or more posts wanting to know how to circumvent Activation Lock. Can you imagine Apple getting blamed for users losing their fortunes in the Wallet App? 

    No, Apple, don’t do this!
    I read that same story and this is why Bitcoin won't be the mainstream currency as people are making it out to be.  The security measures are to archaic that it just means that people will be lazy and forgetful and next thing you know, one's money is lost.
    The use of biometrics should mitigate that particular issue. But then you lose anonymity in the process, which may or may not be a good thing depending on your point of view.
    edited February 8 watto_cobra
  • Reply 19 of 58
    JWSCJWSC Posts: 881member
    If Apple were to create its own cryptocurrency with its own block chain it would put itself at the center of trillions of transactions per year. The financial upside of taking a minuscule sliver of each transaction could dwarf Apple’s current earnings.  I actually think Apple could pull this off. And I do agree with the author that it would be easier, technically speaking, than launching an Apple car.

    Doing so would have one very large downside however. it would paint a bright red target on Apple and put them in the crosshairs of every government with its own currency and federal reserve like institution. A company of Apple’s size doing this would be perceived, rightly, as a major threat to the interests and institutions of the global financial system as it stands today.

    That doesn’t necessarily mean it’s a bad thing.  I think it could be a very good thing for the private citizens of the world to have a company truly bound in ethics controlling their own space in the financial system. But how many enemies does one company need, even if it’s a behemoth like Apple?
    edited February 8 cg27watto_cobra
  • Reply 20 of 58
    Wow, apparently there are no AI readers that understand bitcoin or crypto. Let me guess, no one invested in it before the big run up today lol. 

    Firstly, the fact that it is not tied to governments is probably its greatest value add, not a deficit. Second, it has a fixed amount of currency (the max that will ever be created is 21 million), which is released in a regular, predictable pattern, giving it much more stability than fiat currencies; this also means that it can’t be devalued through inflation, like basically all fiat currencies, which are inflated away on a regular basis by irresponsible politicians following a highly flawed Keynesian economic model that employs Modern Monetary Theory (ie when in doubt, print it out). For more education on this, I recommend checking out @saifedean on Twitter. 

    The ‘analyst’ in the article definitely seems a bit overly enthusiastic, and it would not be a good idea for Apple to become an exchange used for investment purposes, but it would be highly beneficial for Apple and its customers to be able to use bitcoin through Apple Pay, and exchange fiat for bitcoin. (BTW, visa has already said they are going to allow bitcoin to be used through their system.) This would be a highly valuable service that Apple could provide, as they could hold the bitcoin securely, thus eliminating the risk for customers to hold it privately with their own keys (many popular exchanges do this already). 

    It would also be highly valuable to Apple to secure some of their holdings in this rapidly appreciating asset as a hedge against inflation, which is extremely expensive for Apple given their huge war chest. 

    Lastly, it would be another huge value add for Apple to create its own cryptocurrency, where it can provide incentives for customers and facilitate micro transactions within the Apple ecosystem. 

    One of Apple’s most valuable assets is the trust it has built. Another is its stance on privacy (which Apple still has not conveyed adequately.. so many uniformed people, basically every person I’ve talked to about it, says, ‘all the companies spy on you,’ very frustrating). Apple can leverage both of these to its advantage to provide a valuable service to its customers as we transition to an inevitable future. 
    edited February 9 cg27JWSC
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