Apple is already the most valuable company in the world, with a market value of $750 billion (£482 billion), but activist shareholder and investor Carl Icahn claims the company should be worth $1.4 trillion (£900 billion).
Icahn argues that nobody knows Apple’s true value and Wall Street continues to undervalue the future of the company, already the hottest stock for young investors between the ages of 18 - 35.
Apple’s share price currently sits at $130 (£83.75), but Icahn wants to see a 90 per cent increase to $240 (£154) per share. Considering Apple has already noted 48 per cent growth in the past year, that is a big upward trend, and we suspect most traders on Wall Street would disagree with Icahn’s new pricing.
The iPhone business on its own is enough to make investors interested, tapping into China last year and becoming the largest mobile provider in the region last quarter, alongside selling 74 million iPhones in the first quarter of 2015; beating Samsung.
The worry is that apart from iPhone, Apple doesn’t really have another wow-factor product. The iPad has been in decline for six straight quarters. The Mac accounts for less than five million sales per quarter. The Apple Watch will only manage a quarter of the iPhone sales in 2015.
On the software side, it is even worse. iTunes dwindles in revenue as Spotify, Rdio and other music streaming services grow. Apple Pay makes up less than 0.1 per cent of Apple’s overall revenue. The main positive is Apple’s iOS App Store, but even that is starting to slow down when it comes to profit.
Apple is planning to relaunch Beats Music and launch a new Internet TV service at WWDC 2015 to offer some variety on the software side, but there is no telling whether Apple will see green with these two ventures in the near future.
Icahn points to the electric car project as a potential boost for the company. Apple is planning to make the electric car autonomous, but the launch dates are between 2018 and 2020, making it more of a hope than solid proof Apple is worth more than its current value.
Still, in the long term Apple’s Mac sales are growing and the Apple Watch could explode in popularity next year. These new services might give Apple a mix of services and products to balance the revenue sheet, making the iPhone just one of the main features in a quarterly report instead of the main event.