Apple can surge another 25% by adding cryptocurrency services to its Wallet app, RBC says

(Photo by Lisa Maree Williams/Getty Images)
  • RBC analysts lifted their price target for Apple to a street-high $US171, implying a 25% rally from Friday’s close.
  • The tech giant can unlock a multibillion-dollar business by opening its Wallet app to crypto trading, RBC said.
  • Apple can attract users to the service by buying $US1 billion in bitcoin itself, the team added.
  • Watch Apple trade live here.

Apple shares can jump higher from current levels if the tech giant makes its first step into the cryptocurrency market, RBC Capital Markets said Monday.

Analyst Mitch Steves lifted RBC’s price target for the iPhone maker to $US171 from $US154 in a note to clients, implying a 25% increase from Apple’s Friday closing level. The target is now the highest among Wall Street analysts. Steves also maintains an “outperform” rating on the shares.

While most headlines surrounding Apple’s future offerings have recently focused on a potential electric car, RBC sees more near-term opportunity in the company’s unassuming Wallet application. Apple has expanded the app over the years, most recently making its first foray into financial services with the Apple Card in 2019.

Wallet already contributes to Apple’s increasingly robust Services business, but an expansion into the crypto sector can make it an even bigger boon, RBC said. Opening the Wallet app to the purchase and sale of cryptocurrency could immediately cement Apple as a leader in the industry and bolster its Services revenue, according to the team.

Read more:
Credit Suisse says to buy these 16 ‘highest-conviction’ stock picks that are set to outperform despite the market’s contrarian view

“If the firm decides to enter into the crypto exchange business, we think the firm could immediately gain market share and disrupt the industry,” RBC said, adding it could help the US become a leader in crypto over the next 10 to 20 years.

Apple traded roughly 0.6% lower as of 2:45 p.m. ET Monday. Shares opened sharply lower before briefly turning positive and paring gains later in the day.

Getting into crypto is already a proven money-maker. Square takes in $US1.6 billion a quarter through bitcoin trading revenue from its roughly 30 million active users. Apple has an install base of about 1.5 billion people, signalling the company could make up to $US40 billion a year from a Wallet-based crypto exchange, according to RBC.

Development costs for the multibillion-dollar revenue stream would be minimal, the team added. Square’s entire R&D budget is less than $US1 billion.

Apple could supercharge its move into the crypto industry by buying $US1 billion in bitcoin for itself, the analysts added. The move would attract more users to its Wallet-based exchange and likely lift bitcoin prices, they added.

Such a purchase isn’t unheard of. Tesla announced Monday it bought $US1.5 billion in bitcoin, saying the token offered “more flexibility to further diversify and maximise returns on our cash.” The popular cryptocurrency leaped above $US44,000 for the first time ever on Monday on news of Tesla’s purchase.

Read more:
A wealth management research chief shares 6 stock-market sectors to buy as the country reopens and the economy experiences its ‘best single year of GDP growth since 2000’

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.