Although Apple has moved a bit from its all-time high it hit in January in recent months, Wedbush analyst Dan Ives remains very bullish on the stock, even seeing a $ 3 billion market cap in sight.
• Apple is increasingly focusing on services
• Dan Ives expects market capitalization of 3 trillion US dollars
• Also headwinds for Apple
In the summer of 2018, Apple became the first publicly traded company in the world to achieve a market capitalization of one trillion US dollars. And in 2020 it even broke the two trillion mark. Apple is currently slightly higher at $ 2.16 trillion (as of June 16, 2021), but Dan Ives, an analyst at the US investment company Wedbush, still sees a lot of room for improvement.
Apple relies on the service business
The iCompany has long wanted to make itself less dependent on its flagship product, the iPhone. Among other things, he is making great efforts to expand his service business. This strategy not only secures regular income, which makes the sales development less prone to fluctuations, but Apple also benefits from the fact that the profit margin for digital services is considerably higher than for hardware.
$ 3 trillion market value
Ives has high hopes for this development. He currently values Apple’s service business at around $ 1 trillion, but assumes it will soon be worth $ 1.5 trillion, helping to raise the group’s market capitalization to $ 3 trillion. “We think that it will be ready in twelve to 18 months,” he told the US broadcaster “CNBC” a timeframe for this goal.
“They [Apple] have built an iron fence around their products and are continuously making a profit from it,” said the Apple bull, who only raised the price target for Apple from 175 to 185 US dollars in April and confirmed its outperform rating. Apple shares are currently listed at $ 130.15 (as of June 16, 2021).
Dan Ives is convinced that the company from Cupertino, California is currently laying the foundation for the next stage of growth, in which software and services will play important roles: “If you look at the innovations, if you look at the current super cycle in the service business I think this is the next stage of growth, “said the analyst.
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Risks to Apple
But despite all the optimism, the Wedbush analyst also warned of possible risks that could prevent the 3 trillion market capitalisation from being reached. Because the Apple App Store system is currently facing violent attacks.
On the one hand, the EU Commission accuses the iGroup of unfair competition in the music streaming app business. On the other hand, the “Fortnite” developer Epic Games is suing the court because it operates its own app store on the iPhone and Apple no longer wants to pay taxes. Since Apple has so far collected 30 percent of the income from app developers, or 15 percent for company sales under one million US dollars, this process could change the app business on Apple devices significantly.