Apple Car 50%-60% Likely, 100% Insignificant (AAPL)

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I love Apple (AAPL) stock, I love my iPhone and I love Tesla Motors (TSLA).

Apple Car 50% to 60% Likely, 100% Insignificant (AAPL)What I don’t love is the idea of Apple getting into the electric car business, nor do I think it will make any difference at all to AAPL stock — at least not for another decade.

So why worry about the prospect of an Apple car?

Apple Car: A Long Way Away

The chief reason is that influential AAPL stock analyst Gene Munster of Piper Jaffray just put out a note to clients bringing the issue to the forefront. In his note, Munster writes:

“We believe a car from Apple is further away than some people think (closer to 10 years away than 5 years), but the car theme will impact AAPL’s multiple as investors increasingly view the opportunity as a long-term growth driver.”

The note from Munster comes roughly seven months after news broke that Apple had launched a somewhat cryptic venture called “Project Titan.”

Details of the project with the cartoonish name were given in a Wall Street Journal article titled, “Apple Gears Up to Challenge Tesla in Electric Cars.”

The February story certainly did arouse my curiosity as an auto industry watcher, as an investor and even as a self-styled amateur futurist, but I wasn’t about to buy Apple stock on this news.

I do like AAPL, but it’s not because of the company’s four-wheel prospects. It’s because of the cult-like embrace of the company’s smartphones, tablets and computers.

While the thought of an Apple car, or “iCar,” might be interesting to that cult-like customer, I can’t see Tim Cook outdoing Elon Musk in the “cool” department when it comes to creating an automobile you’d want to drive.

The one huge thing Apple has going for it is its massive cash war chest, which, when targeted effectively, definitely has the potential to surprise.

Still, even Munster pegged the chances “on a car becoming a reality” at around 50%-60%.

Driving Change in the Auto Industry

Munster did say that an Apple vehicle is “more poised for meaningful disruption” than other potential Apple products, such as an Apple television set. While this may be true, I think it is far too early to think about an Apple car having any type of impact on AAPL’s multiple.

It is not, however, too early to think about what cars will look like in five or 10 years and which companies are positioned to benefit from the trends that are shaping the auto industry.

Trends such as driver-assist technology, backup cameras, sensors, mobile connectivity, microchips, etc. all are going into cars and trucks right now. There’s no 50%-60% prospect — it’s already here.

Some of the companies producing that technology include software maker Mobileye NV (MBLY), computer chip maker Ambarella (AMBA) and ultra-lightweight materials maker Magna International (MGA).

The bottom line is that an Apple car isn’t going to do much (at least not yet) for AAPL stock.

However, if you want to bet on the high-tech trends in automobiles, then I still like TSLA, as well as MBLY, AMBA and MGA.

As of this writing, Jim Woods was long AAPL, TSLA.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/09/apple-car-50-60-likely-100-insignificant/.

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