Apple (AAPL) - Get Report could be on the fast track to a market capitalization of as much as $3 trillion - about a trillion more than where it is now - if the so-called Apple Car begins rolling off assembly lines and into peoples’ driveways.
In a research note to clients, Citigroup analyst Jim Suva said he sees Cupertino, Calif-based Apple already on the road to a $3 trillion market cap from $2 trillion as the iPhone and computer maker preps to roll into the electric vehicle market.
While the rollout of an Apple Car would likely produce additional shareholder value, Suva also cautioned that margins still likely would be lower than on other products, as auto sector profitability in general is much lower. Suva has a buy rating on Apple.
Apple shares surged last month as investors and analysts re-rated the hardware maker’s long-term growth prospects following reports that it would partner with South Korean automaker Hyundai-Kia to build an Apple Car. Hyundai has retracted statements it was in talks with Apple.
The stock has fallen since amid the broader tech rout, though other analysts also see Apple hitting a $3 trillion market cap, including Wedbush Securities’ Dan Ives, who not only expects an Apple Car to be part of Apple’s future but sees the EV market in general exploding.
Ives this week added Apple to Wedbush’s "Best Ideas List" as the recent selloff creates a golden buying opportunity with a $3 trillion valuation on the horizon thanks to “crushed” iPhone sales expectations and much more in the works. He has an outperform rating on the stock and a one-year price target of $175.
While automakers continue to pivot toward all-electric offerings, at least one cautioned that Apple’s foray into the EV market involves much more than just cranking out hardware on wheels.
Toyota (TM) - Get Report President Akio Toyoda said this week that he welcomed the possible entry of Apple into the car business, but said the iPhone maker should be ready for a decades-long commitment to its customers.
"Anyone can make a car if they have the technical ability, but, once they make a car, I hope they'll recognize they have to steel themselves for 40 years of responding to customers and to various changes," Toyoda said at a news conference in his capacity as chairman of the Japan Automobile Manufacturers Association.
At last check, shares of Apple were down 1.94% at $119.60. The stock has fallen approximately 8.1% year to date.