All told, an Apple-Disney merger seems unlikely. Even RBC admitted as much … but that doesn’t mean Apple isn’t making a deal of some sort.
The Big Apple Deal
One argument against an AAPL-DIS merger is that Apple doesn’t do big deals. Its purchase of Beats Music for $3 billion was the largest deal Apple has ever pulled off.
But there’s reason to think that strategy may change. In January, AAPL CEO Tim Cook said Apple’s goal was to double services revenue in four years. As Fortune pointed out, that goal is unlikely without an acquisition — and it would take a reasonably large deal to get Apple to its ~$50 billion target. And Cook did say on the Q1 call that the company wasn’t constrained by size in considering acquisition targets.
That doesn’t mean Disney will be the target, of course. But Apple’s cash pile — particularly with some help from tax reform — and strategy creates a world of possibilities. Last September, another analyst speculated about an Apple takeover of Netflix, Inc. (NASDAQ:NFLX).
Bloomberg pointed out in February that Apple could have purchased Tesla Inc (NASDAQ:TSLA) to move along its self-driving car ambitions. The site also reported that AT&T Inc. (NYSE:T) feared a competing bid from Apple for Time Warner Inc (NYSE:TWX).
At some point, Apple likely will make a move. And the fact that Apple likely has to make such a move explains some of my skepticism toward Apple stock. The company simply hasn’t been able to drive growth beyond the iPhone on its own. If it has to buy that growth, it could bring added risk to AAPL stock.
As of this writing, Vince Martin did not hold a position in any of the aforementioned securities.