Apple can surge another 25% by adding cryptocurrency services to its Wallet app, RBC says
- RBC analysts lifted their price target for Apple to $171, implying a 25% rally from Friday's close.
- Apple can unlock a multibillion-dollar business by opening its Wallet app to crypto trading, RBC said.
- Apple can attract users to the service by buying $1 billion in bitcoin itself, the team added.
- Watch Apple trade live here.
Apple shares can jump higher if the tech giant steps into the cryptocurrency market, RBC Capital Markets said Monday.
In a note to clients, the analyst Mitch Steves lifted RBC's price target for the iPhone maker to $171 from $154, implying a 25% increase from Apple's close on Friday. The target is the highest among Wall Street analysts. Steves also maintained an "outperform" rating on the shares.
While headlines about Apple's future offerings have recently focused on an electric car, RBC sees more near-term opportunity in the company's Wallet app. Apple has expanded the app over the years, making its foray into financial services with the Apple Card in 2019.
Wallet already contributes to Apple's increasingly robust Services business, but an expansion into the crypto sector could make it an even bigger boon, RBC said. Opening the Wallet app to the purchase and sale of cryptocurrency could cement Apple as a leader in the industry and bolster its Services revenue, according to the team.
"If the firm decides to enter into the crypto exchange business, we think the firm could immediately gain market share and disrupt the industry," RBC said, adding that it could help the US become a leader in crypto over the next 10 to 20 years.
Apple traded roughly 0.6% lower as of 2:45 p.m. ET on Monday. Shares opened sharply lower before briefly turning positive and paring gains later in the day.
Getting into crypto is a moneymaker. Square takes in $1.6 billion a quarter through bitcoin-trading revenue from its roughly 30 million active users. Apple has an install base of about 1.5 billion people, signaling that it could make up to $40 billion a year from a Wallet-based crypto exchange, according to RBC.
Development costs would be minimal, the team added; Square's entire R&D budget is less than $1 billion.
Apple could supercharge its move into the crypto industry by buying $1 billion in bitcoin for itself, the analysts said, adding that it could attract more users to its Wallet-based exchange and likely lift bitcoin's price.
Such a purchase isn't unheard of. Tesla announced on Monday that it had bought $1.5 billion in bitcoin, saying the token offered "more flexibility to further diversify and maximize returns on our cash." The popular cryptocurrency leaped above $44,000 for the first time on Monday on the news of Tesla's purchase.
