Cryptocurrency should be Apple's future financial gambit, analyst says
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
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.
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.
Comments
No, Apple, don’t do this!
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.
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.
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.
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.
Or maybe click-bait discussion by association to put cryptocurrency into focus, is his goal?
...and we co-operated.
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?