In accordance with Gene Munster, Apple’s inventory has a path to a $ three trillion market cap
Tech investor Gene Munster told CNBC on Thursday that he saw a sensible path for Apple to reach a future market cap of $ 3 trillion.
The iPhone maker was the first publicly traded US company to reach a market capitalization of $ 2 trillion in August – a milestone Münster anticipated in January when he advocated the stock trading 50% higher. As of Thursday, Apple was valued at nearly $ 2.3 trillion at roughly $ 133 per share.
Munster, who reported to Apple as a longtime analyst at investment bank Piper Jaffray, said on Squawk Box that he believes the California-based company can realistically hit $ 200 per share. That would put the market cap over $ 3 trillion.
“It has to be anchored in the result. This is the powerful piece of Apple history,” said Munster, co-founder of venture capital firm Loup Ventures. He said his forecast was based on Apple trading at value for money or a multiple of 35 for earnings estimates for 2022.
“It’s been a year out there, but I’m fast forwarding the conversation to the middle and back half of next year, and we’ll be talking about 2022 at that point. If the market can take those 35 multiples – you know, we’re talking.” here not by an Amazon-like multiple – I think that this path is there, “said Münster.
Apple’s current price-to-earnings ratio is nearly 41, after the stock was up 81% this year. Amazon, whose shares are up 76% this year, is trading 95 times.
One catalyst that could help push Apple further is the greater spread of remote working that is being triggered by the coronavirus pandemic, Munster said.
“This is generally seen as a game on the iPhone, a 5G game. That is good. That will have a positive effect on the numbers, but this acceleration of the digital transformation is powerful in my opinion,” said Münster. “People who work from anywhere will upgrade and buy more Macs, iPads, and services in the next 12 to 24 months.”
Munster also reiterated his belief that Apple’s multiples could withstand further expansion as investors rethink the company, which in recent years has been pushing for more revenue from services to increase hardware sales.
Munster for his part means that Apple can use its hardware business for a service, for example to buy a Mac by subscription. “We believe this is coming, and talking more about cars is a big opportunity for Apple’s multiples,” Munster said, alluding to reports that Apple may be manufacturing an electric car in a few years.
More broadly, he said he believes Apple will continue its strong stock performance into 2021, especially when compared to its so-called FAANG brothers. In addition to Apple, the group of technology companies also includes Amazon, Facebook, Google’s parent alphabet and Netflix.
“We believe there will be another break from FAANG,” said Münster, with Facebook and Netflix lagging behind Apple and Amazon. “I think for 2021 the performance will come again from Apple. It may seem numb for a company to run FAANG for three years in a row, but I think that’s actually going to happen. I think this has a trail of 200.” U.S. dollar [per share]. “