Apple (AAPL) share price jumps on rumours of Apple car in the product pipeline.
There has been a battle over which company is the most valuable in the world. When Microsoft (MSFT) toppled Apple last month, it created shockwaves. But Apple has regained its top spot this week. Its market capitalisation currently sits at $2.59 trillion, ahead of MSFT’s $2.56 trillion.
What caused Apple to move ahead? One big item that excited investors recently was Apple Car. Rumours are swirling that Apple is about to get really serious about selling self-driving electric vehicles soon. The target date is 2025.
The capital market for electric cars has been running really hot these days. Rivian (RIVN) – an automotive company with negligible sales – IPO’ed recently (10 Nov) and quickly achieved a market capitalisation of $150 billion. Lucid (LCID), another newly established electric car market, surged to a market cap of $91 billion despite losing more $500 million in the last quarter. These market capitalisations eclipsed that of the traditional ‘Big Three’ car companies (Ford, General Motor, Fiat Chrysler).
Given this is a new and exciting industry, Apple would want a slice of it. Hence the big push in making autonomous electric cars with its own computer chips. It is hiring people, talking to suppliers, and accelerating the development of the product.
On Thursday, the company closed at its all-time of $157 per share.
Apple share price closed at new record highs this week. This means one thing – that every shareholder is sitting on profits. Some profits are large, such as Warren Buffett’s 5.4% stake, some are small, especially if investors only bought recently. Nonetheless, all investors are in the black.
Psychologically, this is good because there will be no great impetus to sell. Many will be content to sit back and let the trend roll further. A stock that hits new price highs is likely to continue doing so. Few short sellers will want to risk shorting a stock with strong upward momentum.
But bear in mind that this is $2.5 trillion company. It will take a lot of buying to move the stock higher. The nearest and most obvious target is at $160.
If you are chasing the stock, do not expect huge returns from here because of its size.
Apple is the most-followed company in the world. Its recent products such as iPhone 13 and MacBook are all well received in the market. Earnings growth are following these hit products, and the market is pricing in a leap in profits next year. Apple will now let customers repair their own iPhone 12 or 13 – another growth area (of selling components).
According a rather large panel of 41 analysts aggregated in the Financial Times, 34 are recommending the stock as ‘Buy’ or ‘Outperform’. Unlike a year ago, there are no analysts recommending ‘Sell’ or ‘Underperform’. This is a very bullish consensus. The most positive price target is at $190.
Based on this, we can expect more bullish reports from Apple over the medium term.