Apple (AAPL) has spent the past 30 years hitting many home runs. He launched everything from the iMac to the iPod to the iPhone, iPad, Apple Watch and AirPods. Plus, it’s being pushed deeper into recurring revenue businesses with AppleCare, Apple Music, and Apple TV +.
But according to Wedbush analyst Dan Ives, the tech titan has made a major misstep: not to buy Netflix (NFLX). Ives, who has an outperformance rating on Apple stock, said it would have put the tech giant in a better position in the current streaming wars dominated by Netflix, Amazon (AMZN) and Disney + (DIS ).
“The biggest strategic mistake, in my opinion, of Jobs and Cook over the past 10 to 12 years, is not acquiring Netflix several years ago,” Ives told Yahoo Finance Live, referring to the founder and former late CEO Steve Jobs. , and current CEO, Tim Cook.
But that doesn’t mean Apple won’t continue to perform. In fact, Ives says the company’s market capitalization, which currently stands at around $ 2 trillion, will reach $ 3 trillion by the end of 2021.
Apple needs to buy a studio
Analysts and pundits have been pushing for years for Apple to buy Netflix, which is seen as the service to beat in the streaming wars. But Apple generally doesn’t make big, big acquisitions. Apple’s most public pickup in recent history was headphone company Beats in 2014.
The purchase of Netflix would have given Apple a huge stake in the streaming video industry, saving it from having to create its own offering from scratch. The company’s main releases so far include “The Morning Show,” “Ted Lasso,” and “For All Mankind,” and while they’ve gained public attention, none have become the kind of force. culture that people like Netflix and Disney + have embarked on with shows like “Tiger King”, “The Queen’s Gambit” and “The Mandalorian”.
Apple does not publish subscriber numbers for TV +, but Netflix reported in its most recent earnings call that it exceeded 203 million users worldwide, while Disney + reached 94.9 million. subscribers just over a year after its launch in November 2019.
According to Ives, the only way Apple can catch up with the top dogs in the streaming space is to buy its own big Hollywood studio.
“We’ve been talking about an MGM, a Lionsgate, an A24, otherwise they’re going to continue to be kind of on the outside looking inside,” Ives said. “And that’s why I think it’s something they’re going to be forced into … because it’s all about content.”
Ives said Apple TV + ‘s relatively thin content catalog was akin to owning a mansion but didn’t have much to provide.
“That’s the problem when it comes to this arms race that we see especially with Disney and of course Netflix at the top of the heap,” he said.
Apple’s iPhone and a future car
Of course, the iPhone, the little rectangle that has practically been printing money for Apple since 2007, continues to be very popular for the company. Its iPhone 12 range, Apple’s first to incorporate 5G cellular technology, performed particularly well.
According to Ives, Apple could sell between 240 and 250 million iPhones in 2021. That, Ives said, could push the company’s market cap beyond $ 3 trillion.
Importantly, this assumes that Apple continues to see record iPhone sales similar to the company’s in its most recent quarter where it reported $ 100 million in revenue.
Going forward, if the rumors turn out to be true, Apple could enter the electric car business by partnering with an automaker like Hyundai. This would open the company up to a market worth trillions and put it in direct competition with Tesla.
It would also help the company to better diversify its offerings outside of iPhone and iPhone accessories. However, it is not known when and if Apple will make the transition to the automotive world.
Recent reports indicate that while talking to vendors of sensors that will help the Apple car deliver autonomous driving capabilities, the company has also slowed down talks with Hyundai – leaving the whole company on hold for now.
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