Apple’s Services business alone is worth significantly more than Tesla – analyst

Apple 3.0’s Philip Elmer-DeWitt has published excerpts from note to Wedbush clients from analyst Daniel Ives that pegs Apple’s Services business at “$1.5 trillion in the eyes of the Street,” or some $319 billion more than the current market value $1.181 trillion value of Tesla.

Apple TV+
Apple TV+

Apple’s Services business is currently comprised of Apple TV+, Apple Music, Apple Fitness+, Apple Arcade, Apple News+, iCloud storage, AppleCare, Apple Podcasts, Apple Books, Apple Card, and Wallet (Apple Cash, etc.).

Philip Elmer-DeWitt for Apple 3.0:

From a note to Wedbush clients that landed on my desktop Sunday:

While the supply chain shortages has dominated the Street conversation around Apple in the holiday quarter, we instead are focused on the robust consumer demand story shaping up for iPhone 13 into 2022. Based on our supply chain checks over the last few weeks, we believe demand is outstripping supply for Apple by roughly 12 million units in the December quarter which now will add to the tailwinds for Cupertino in the March and June quarters as the supply chain issues ease in 1H22…

The linchpin to Apple’s valuation re-rating remains its Services business which we believe is worth $1.5 trillion in the eyes of the Street, coupled by its flagship hardware ecosystem which is in the midst of its strongest product cycle in over a decade led by iPhone 13.

MacDailyNews Note: Wedbush maintains an “Outperform” rating and $200 price target on Apple shares.

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4 Comments

  1. Good breakdown of Services Category but the list missed a few categories — especially the third party deals. Google pays multiple billions (some suggest up to 10 billion a year) to be the default search engine on Safari. I believe the not insignificant AppleCare+ is in the Services revenue category too as well as “software” sales.

    Apple Service revenue category is a juggernaut. Other services based companies get extremely high valuations yet much of their revenue model is largely dependent on data and advertising. Apple Services, though not without headwinds, is currently a ship that is full steam ahead with few clouds on the horizon.

  2. Tesla is so highly-valued and I find it quite amazing. Wall Street can readily accept Tesla’s P/E of 375 but yet they think Apple’s P/E of 32 is too high. That’s difficult for me to understand. I believe Apple is fairly priced but what I think doesn’t matter. Maybe when Apple announces AppleCar, Wall Street will at least accept Apple’s valuation. It seems as though anything Elon Musk introduces, investors think it’s absolutely wonderful for the company. It’s nice to have investors like that.

    Wall Street is certain everyone in the world will be buying plenty of Tesla vehicles for the next decade despite growing competition. Tesla shareholders are very fortunate to own such a high-value stock. I don’t personally know anyone who wants to buy a Tesla or any EV. Maybe they just don’t know it yet. I think Teslas are attractive vehicles but I live in NYC and I don’t have a garage or even need a car, so it’s definitely not the vehicle for me. I do own a dual-motor stand-up electric scooter and an electric bike, so I’m covered for owning PEVs.

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