Apple Will Be The Next Major Company To Add Bitcoin To Its Balance Sheet
I’m making a prediction here and now. Apple Inc. (“AAPL”) will be the next major company to add bitcoin to its balance sheet. This isn’t a long-term prediction. I am predicting that Apple add bitcoin to its balance sheet in the next month. By March 8th, I bet Apple will have dropped an 8-K highlighting a recent bitcoin purchase.
No matter how silly it seems and no matter if you are a bitcoin bull or you think bitcoin will go to zero, if Apple spent $3-5 billion on bitcoin it could open up an entire new market for them. Let’s go over the numbers.
Given that Apple has $76 billion of cash and marketable on its balance sheet and the company generates $25-30 billion of operating income each quarter, a bitcoin purchase of $3-5 billion would be miniscule – nothing to get excited about at all. Thus, taking 3-5% of your cash and putting it in bitcoin won’t break the bank – its more of a small rounding error if anything.
So what is the point? Well as the RBC analyst, Mitch Steves said, it will open new markets via an Apple Wallet and crypto-exchange.
“The wallet initiative appears to be a clear multi-billion dollar opportunity for the firm (potential for well over $40 billion in annual revenue with limited R&D).”Mitch Steves, RBC
In addition Steves mentions that Apple will take market share almost overnight from their competitors Square and PayPal. Steves went further to state:
“To put some numbers around this, Square generates ~$1.6B/qtr in bitcoin related revenue on an active install base that we estimate to be in the ~30M range. Apple’s install base is 1.5B and even if we assume only 200M users would transact, this is 6.66x larger than Square.”Mitch Steves, RBC
Not only would a bitcoin purchase open up a new market for Apple, but it could also create shareholder value at a small cost with a $3-5 billion investment. For an example, since PayPal has announced that they will allow customers to transact with bitcoin, the price has gone up over 40%. Sure bitcoin could crash to zero and become worthless overnight. But an investment of $3-5 billion is pennies for a company with a market capitalization of $2.3 trillion.
I could be wrong though. Tim Cook, CEO of Apple did state in 2019 that he thinks a currency should stay in the hands of countries, not companies when he criticized Facebook’s investment into the Libra currency.
“No. I really think that a currency should stay in the hands of countries. I’m not comfortable with the idea of a private group setting up a competing currency,” he said.Tim Cook
But opinions in the tech world change fast, and fast. And now that Tesla (seen as a first mover in the tech space) has bought bitcoin and will be allowing their customers to purchase goods with it, it is more likely we will see a major company like Apple step up to the plate next. Will Tim Cook take a swing when it comes? Or will he just punt? Time will tell.