House antitrust legislation has more bark than bite, analyst says
Despite a slate of sweeping antitrust bills in the U.S., investment bank Wedbush believes there's no major threat to the structure of most large technology companies like Apple.
Credit: WikiMedia Commons
In a note to investors seen by AppleInsider, lead Wedbush analyst Daniel Ives writes that investors are continuing to "shrug off" concerns about antitrust regulations and the potential breakup of Silicon Valley giants. That's because the bark is worse than the bite, Ives said.
Earlier in June, U.S. lawmakers introduced five pieces of antitrust legislation that could bolster competition enforcement, prevent companies from competing in online app stores they maintain, and place restrictions on the preinstallation of first-party apps on hardware devices.
Ives believes that, unless current antitrust laws are modified, the current momentum will more likely only result in fines or business model tweaks rather than the breakup of tech companies.
The analyst says that the lack of consensus and divergence among both sides of the aisle on antitrust issues presents a major obstacle to move legislation forward. Additionally, without core law changes, Ives thinks the current antitrust push could hit a "brick wall."
In other words, Ives believes that the current antitrust momentum is more of a "headline risk" that tech investors are currently taking in stride.
However, the analyst predicts that there is currently a $20 per share overhang on Apple stock because of potential antitrust regulation in both the U.S. and Europe. He also believes that the Epic Games v. Apple lawsuit verdict and the appointment of antitrust scholar Lina Khan as the federal trade commissioner have both added uncertainty to the situation.
"Taking a step back, our view around the monopolistic and anti-trust swirls remain a containable headline risk for Apple and Big Tech for now. We also believe the App Store remains a very defendable moat both in the courts and in the Beltway and speaks to our view that Apple remains more on the edge rather than the center of the anti-trust spider web with Facebook/Alphabet more in the 202 area code spotlight," Ives writes.
Wedbush remains "very bullish" on technology stocks for the second half of 2021. Ives believes that tech stocks could accumulate another 15% in value in that period, despite the threat of antitrust regulation.
The analyst maintains his 12-month Apple price target, a sum-of-the-parts valuation based on Wedbush's 2022 estimates. It includes a 16x multiple applied to Services at $1.3 trillion and a 7x multiple applied to the rest of Apple's hardware ecosystem at $2.1 trillion.
Keep up with everything Apple in the weekly AppleInsider Podcast -- and get a fast news update from AppleInsider Daily. Just say, "Hey, Siri," to your HomePod mini and ask for these podcasts, and our latest HomeKit Insider episode too.If you want an ad-free main AppleInsider Podcast experience, you can support the AppleInsider podcast by subscribing for $5 per month through Apple's Podcasts app, or via Patreon if you prefer any other podcast player.AppleInsider is also bringing you the best Apple-related deals for Amazon Prime Day 2021. There are bargains before, during, and even after Prime Day on June 21 and 22 -- with every deal at your fingertips throughout the event.
Credit: WikiMedia Commons
In a note to investors seen by AppleInsider, lead Wedbush analyst Daniel Ives writes that investors are continuing to "shrug off" concerns about antitrust regulations and the potential breakup of Silicon Valley giants. That's because the bark is worse than the bite, Ives said.
Earlier in June, U.S. lawmakers introduced five pieces of antitrust legislation that could bolster competition enforcement, prevent companies from competing in online app stores they maintain, and place restrictions on the preinstallation of first-party apps on hardware devices.
Ives believes that, unless current antitrust laws are modified, the current momentum will more likely only result in fines or business model tweaks rather than the breakup of tech companies.
The analyst says that the lack of consensus and divergence among both sides of the aisle on antitrust issues presents a major obstacle to move legislation forward. Additionally, without core law changes, Ives thinks the current antitrust push could hit a "brick wall."
In other words, Ives believes that the current antitrust momentum is more of a "headline risk" that tech investors are currently taking in stride.
However, the analyst predicts that there is currently a $20 per share overhang on Apple stock because of potential antitrust regulation in both the U.S. and Europe. He also believes that the Epic Games v. Apple lawsuit verdict and the appointment of antitrust scholar Lina Khan as the federal trade commissioner have both added uncertainty to the situation.
"Taking a step back, our view around the monopolistic and anti-trust swirls remain a containable headline risk for Apple and Big Tech for now. We also believe the App Store remains a very defendable moat both in the courts and in the Beltway and speaks to our view that Apple remains more on the edge rather than the center of the anti-trust spider web with Facebook/Alphabet more in the 202 area code spotlight," Ives writes.
Wedbush remains "very bullish" on technology stocks for the second half of 2021. Ives believes that tech stocks could accumulate another 15% in value in that period, despite the threat of antitrust regulation.
The analyst maintains his 12-month Apple price target, a sum-of-the-parts valuation based on Wedbush's 2022 estimates. It includes a 16x multiple applied to Services at $1.3 trillion and a 7x multiple applied to the rest of Apple's hardware ecosystem at $2.1 trillion.
Keep up with everything Apple in the weekly AppleInsider Podcast -- and get a fast news update from AppleInsider Daily. Just say, "Hey, Siri," to your HomePod mini and ask for these podcasts, and our latest HomeKit Insider episode too.If you want an ad-free main AppleInsider Podcast experience, you can support the AppleInsider podcast by subscribing for $5 per month through Apple's Podcasts app, or via Patreon if you prefer any other podcast player.AppleInsider is also bringing you the best Apple-related deals for Amazon Prime Day 2021. There are bargains before, during, and even after Prime Day on June 21 and 22 -- with every deal at your fingertips throughout the event.
Comments
Yet, corporate lobbyists will almost always fight, and win, against said toothless regulation anyway. Why? Because the “value” of the chips in their gambling den is entirely based on manipulating human opinion.