It has been suggested by Wall Street that cash rich Apple should consider purchasing Tesla. The two companies have been inextricably linked over the last few years, owing to Apple’s endeavors in the electric car marketplace. But now financial sector analysts suggest that Tesla would be an ideal target for Apple, as the company looks to diversify its interests and revenue streams.
$200 billion cash lump
There have been numerous reports pointing to the $200 billion of cash in hand that Apple has available, and FBR & Co. is one Wall Street institution that believes Tesla should benefit from this status. In a recent note, FBR & Co.’s Dan Ives picked Tesla as one of the four big acquisition prospects for Apple. It is thought that the purchasing of Tesla could play a major role as a growth generating engine for the corporation in the coming years.
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Of particular interest to Apple would be the battery technology that Tesla has developed, which would make the corporation an especially attractive purchasing target. This could help Apple accelerate its entry into the next generation auto market, with the potential for Apple to build on the innovations that Tesla has already achieved with the development of the Apple Car.
Ives emphasized his belief that the electric car project that Apple has been reportedly developing will be a key initiative for the corporation in the future. An Apple Car has been rumored for some time, but this expected product seems to have been solidified by murmurings that have emerged this year. Leaked emails suggest that Apple has been negotiating to test an electric vehicle in the foreseeable future.
If Apple is to purchase Tesla, it would not come as a huge surprise to followers of the corporation, nor to Wall Street insiders. Apple and Tesla held talks previously, and the two companies have plotted a similar course in terms of ethos in recent years. At the time that Apple executives held talks with Tesla, the idea that the consumer electronics giant could purchase the electric car manufacturer was dismissed by both parties. But now it seems a distinct possibility, and one that would make both commercial and logistical sense for Apple.
While the last few years have been been extremely successful for the California-based corporation, even the world’s largest company by market value faces challenges going forward. Apple has promised the city that it will develop significant new revenue streams in the foreseeable future, and some of its recent activity has been an attempt to achieve this aim. The release of the Apple Watch, for example, is clearly an attempt to generate a new product niche, while the iPhone Plus range can also be seen as a new product series. Finally, the iPad Pro is seen as a major productivity tablet, and one intended to appeal to the business community.
But each of these new products will pale into insignificance compared to the release of an electric car from Apple. This is clearly a massive product for the corporation to develop, and one that could generate a huge amount of revenue for Apple in the next decade. Certainly the tie-in with Tesla is seen as a long-term market strategy, rather than something that would benefit Apple in the near future.
This latest suggestion from Wall Street is by no means the first time that major investors have indicated that Apple would benefit from a merger with Tesla. In July, Piper Jaffray’s Gene Munster suggested that purchasing Tesla would provide a lucrative long-term opportunity for Apple. And at an annual meeting at the Cupertino-based corporation, Apple shareholders also floated the idea directly to Apple CEO Tim Cook.
Tesla’s Musk remains publicly sceptical
Despite the rumors about Apple and Tesla, the notorious founder and CEO of the electric car manufacturer remains publicly skeptical about the prospect of a merger between the two corporations. Elon Musk recently pointed out one of the biggest challenges for Apple in the future, namely that the sheer scale of manufacturing an electric vehicle is massively more complicated than products that Apple is accustomed to. “It’s good that Apple is moving and investing in this direction. But cars are very complex compared to phones or smartwatches,” Musk observed.
Aside from the potential of purchasing Tesla, Ives also suggested that Box, Adobe, and GoPro could all be possible targets for the corporation. Ives believes that each of these companies would fit in extremely well with Apple’s long-term plan of expanding its operations beyond consumer electronics and mobile phones in particular.
The conditions certainly appear to be ideal for Apple to make a larger acquisition move in the future, as the company attempts to modernize and expand its operations.