We’ve been keeping a close eye on the ticker tape (ok, the Stocks app) as it seems that any day now could see a milestone APPL $3T valuation.
But as the company gets ever closer to hitting that market cap, a new Bloomberg piece argues that the recent announcement of Vision Pro likely plays little role in this …
APPL $3T valuation tantalizingly close
Apple became the first publicly traded company to hit a trillion-dollar market capitalization (the share price multiplied by the number of shares) back in 2018.
Two years later, in 2020, it was also the first public company to reach a $2T market cap.
Coming up on three years after that, the company’s share price has seen it sitting tantalizingly close to a $3T valuation for some weeks now.
But while the announcement of Vision Pro was a notable one, representing the company’s first move into a completely new market sector since the Apple Watch back in 2015, Bloomberg‘s Mark Gurman doesn’t see this as a significant factor.
At least in the short term, the Vision Pro will only appeal to the earliest of early adopters — people like software developers, Apple fanatics and mixed-reality zealots. The product has a $3,500 starting price, its underlying technology is still getting refined, and users will have to carry around an external battery pack. Moreover, Apple has yet to spell out a truly compelling reason to use the headset.
Apple itself knows that the headset is going to have a slow start. It’s expecting to sell about 900,000 units in the first year, contributing a few billion dollars in revenue […]
Shareholders know these realities. So it’s certainly not the Vision Pro that has driven Apple to the brink of the $3 trillion mark.
Instead, he cites the ecosystem as the company’s greatest strength from an investor perspective. As we’ve often said, the more deeply you become embedded in it, the harder it is to leave.
Investors may take a passing interest in Vision Pro, but they are likely more interested in the iPhone 15 lineup. This may be less exciting, but analysts are expecting a strong upgrade cycle this year as those who are sitting on older models like the iPhone 11 and 12 may now see a compelling reason to upgrade.
9to5Mac’s Take
We’d largely agree with this take. Apple’s financial strength has long derived from two factors.
First, your first Apple product – which for most people is an iPhone – is a gateway drug. Once you have an iPhone, then there’s a great case for owning an Apple Watch. If you buy a tablet, it’s near-guaranteed to be an iPad. And when it comes time to replace your computer, there’s a very good chance it’s going to be a Mac. That’s in large part due to that tightly integrated ecosystem.
Second, as tired as we might be of hearing the word, Services. Since Apple still gives customers the same comical 5GB iCloud allowance it gave to its iStone customers back in the Neanderthal era, a paid iCloud tier is not really optional. It’s also very likely that you’re going to sign up to other Apple services.
Not to mention AppleCare+ and making Google searches on your iDevices, which also fall within the Services realm.
At the same time, I think there’s no doubt that investors are relieved that Apple is finally adding a brand-new product category. Vision Pro will indeed be almost irrelevant when it first goes on sale. But subsequent generations will see the price fall, and both users and developers will eventually figure out what it is for.
So I do think AAPL investors are reassured by the Vision Pro announcement, even if they don’t expect it to contribute much to Apple’s bottom line in the short-term.
Image: Vision Pro customisation from Casetify
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