Apple has over $200 billion of cash in hand — and Wall Street still thinks it’s best to spend it on buying Tesla.
In a note published Thursday, FBR & Co.’s Dan Ives picked Tesla as one of the four big acquisition prospects for Apple, as the company seeks a new growth engine for the coming decade.
Tesla’s battery technology, in particular, is what makes it an attractive buying target, it said.
“In our view, acquiring Tesla’s advanced battery technology would greatly accelerate Apple’s entrance into the next-generation auto arena, and we estimate valuable economies of scope could be realised while transitioning to mass-market volumes (e.g., consumer electronic batteries, automotive software, etc.),” Ives wrote.
Ives stressed that the electric car project Apple is reportedly working on — code-named “Project Titan” — would be a key initiative for Apple going forward, and a Tesla deal will only help speed up the process.
This isn’t the first time people have entertained the idea of an Apple/Tesla merger. In July, Piper Jaffray’s Gene Munster said a Tesla deal would present a lucrative long-term opportunity for Apple, while one of the shareholders at Apple’s annual shareholder meeting suggested to Apple CEO Tim Cook that Apple should buy Tesla.
Those reports came a few weeks after the San Francisco Chronicle reported that Tesla CEO Elon Musk met with Apple’s head of M&A, and Musk later confirmed a meeting with Apple, although he didn’t specify who exactly he met.
But Musk did express his scepticism over Apple possibly building its own automobiles in a recent interview, when he jokingly said, Apple only hires Tesla’s worse engineers. “It’s good that Apple is moving and investing in this direction. But cars are very complex compared to phones or smartwatches,” he said.
Aside from Tesla, FBR’s Ives picked Box, Adobe, and GoPro as potential acquisition targets for Apple. He thinks all four of those companies work well with Apple’s long-term growth plans of expanding beyond consumer mobile phones.
“We believe Cook’s crystal ball is now focused on building out new technology growth frontiers/product areas for the next decade…with $200 billion of cash in the coffer (and growing), we can finally envision Apple making a larger acquisition, as the conditions are ripe for Cook to make a move,” Ives wrote.
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