Cars Could Contribute $400 Billion To Apple Inc. (NASDAQ:AAPL)’s Top Line

Analysts are beginning to assign value to Apple Inc. (NASDAQ:AAPL)’s business that doesn’t already exist. At Morgan Stanley (NYSE:MS), analysts are or not shy to predict what they believe awaits Apple in the car business. Apple is rumored to be working on a secretive initiative codenamed Project Titan that involves creating branded cars that could end up with names such as iCar or Apple Car.

If it’s true Apple Inc. (NASDAQ:AAPL) is going into car business, Morgan Stanley analysts will tell you the business will add $400 billion to Apple’s topline and $16 per share to its bottom line by 2030.

Pressure to diversify and drive growth

It is believed that the 16% drop in iPhone sales and 13% pullback in revenues in the recent quarter have triggered a sense of urgency for Apple to diversify its revenue streams. With that in mind, analysts speculate Apple is going to accelerate its expansion into car business.

As if to give credence to the rumors, Apple recently invested $1 billion in Chinese taxi company called Didi Chuxing. For many, Didi is the Uber of China and investment in the company strengthens the long-held belief that Apple’s primary area of focus in the auto industry will be shared mobility – think of cap hailing services.

A $2.6 trillion economy

According to Morgan Stanley, the auto segment of shared mobility is already a $2.6 trillion industry and growing. The analysts assume that Apple Inc. (NASDAQ:AAPL) will be able to take 16% share of the market, thus adding $400 billion to its revenue basket in the next 14 years. The new revenue is expected to provide a boost of $16 to Apple’s EPS.

But there are doubts

Although Morgan Stanley sees light at the end of the tunnel shinning bright for Apple Inc. (NASDAQ:AAPL), questions remain about Apple’s ability to penetrate the auto industry. In the car industry, Apple will be facing the kind of competition that is unlike what it has known in technology business. Additionally, the intense scrutiny in the auto industry could further complicate the picture for Apple, potentially delaying or denying it the benefits it is pursuing.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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