Apple Inc.: 400 Billion Reasons to Bet on Apple Stock (AAPL)

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You know all those worries about how Apple Inc. (AAPL) is taking too long to push through another blockbuster product? Well, maybe the wait could be worth it in the end — whenever that end is.

Apple Inc.: 400 Billion Reasons to Bet on Apple Stock (AAPL)

Source: via Apple

This is based off a recent Morgan Stanley report, which found that Apple stock has, thus far, spent more cash on the R&D of electric and autonomous vehicles in recent years than it’s spent on the iPhone, iPad and Apple Watch combined during their formative years.

To makes things more fascinating, Apple stock has outspent the top 14 automakers combined when it comes to incremental spend on automotive research and development.

The roughly $5 billion that Apple has spent on auto-related R&D, between 2013 and 2015, dwarfs the $192 million incremental R&D spend of the top 14 automakers during that time frame. For scale, Tesla Motors Inc (TSLA) doled out $444 million in incremental R&D costs during the same time frame.

Yes, spending more on R&D doesn’t necessarily mean Apple will be successful in the shared-mobility market. And further, no one really knows if that $5 billion is all going into shared-mobility R&D … but at least we now have more assurance that Apple is working on something new and that it means business.

Morgan Stanley is predicting Apple stock will take about 16% of the shared-mobility market, a market that MA analysts believe is worth $2.6 trillion.

The cherry on top? These analysts project that shared mobility would generate over $400 billion in revenue for Apple by 2030.

Enough Reason to Hold Apple Stock Forever?

Morgan Stanley analysts seem confident that Apple is more interested in shared mobility than becoming just another automaker. This is somewhat echoed by Apple’s investment in Chinese ride-hailing startup Didi.

Yes, maybe Apple might make an automobile someday. But the suspicion is that the Apple car might not be available at a dealership for purchase. The cars would be mainly for sharing.

The beauty of this kind of move is not just the potential $400 billion that Apple could make off mobility sharing by 2030, but in the reliability and revenue recurrence that the shared-mobility strategy promises.

Assuming Apple gets a shared-mobility market share anywhere near Morgan Stanley’s prediction, the prospect of making around $400 billion annually from shared mobility alone is mouthwatering. There won’t be many companies that can match the revenue Apple would be generating on an overall basis.

Perhaps this justifies the huge change in R&D spending habit that has taken place at AAPL.

AAPL Has the Cash Advantage

Much has been made of how gigantic Apple’s cash stash is and how no other tech company matches it.

First, having so much cash on hand means that Apple will be able to fend off just about any competitor to make the right acquisitions, as we’ve seen with Didi. Let’s assume that there’s a game-changing mobility startup out there, with all mobility players interested … not many competitors will have the bidding power that Apple has.

Second, when it comes to the production stage, Apple would have more money to finance production than, say, Elon Musk’s Tesla. This means Apple might not need to take on huge debt to expand. This, all the more, makes Apple stock an attractive buy — if you invest for the long term.

Of course, I recently opined that Apple stock is losing its high-end mojo. And just in case you’re wondering, this doesn’t change that. Because, in reality, it’s difficult to see how shared mobility could be a high-end thing.

Still, there’s absolutely nothing wrong with being a mass-market guy. And shared mobility seems enough reason to buy and hold AAPL stock for several years.

As of this writing, Craig Adeyanju did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/06/aapl-apple-stock-apple-car/.

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