Why $1 trillion milestone changes the way Apple is valued

By

Apple adds 5 new vice presidents to its executive lineup
Apple adds 5 new vice presidents to its executive lineup
Photo: Lyle Kahney/Cult of Mac

How high can Apple’s market value go? Less than a week after it became the first company to hit the $1 trillion mark, venture capitalist Gene Munster predicts that Apple’s value will continue to climb.

What makes Apple unique to investors, Munster said, is how its hardware seems to work as a subscription business. Many iPhone users, for example, upgrade to a newer handset every two or three years.

This has created a “paradigm shift in how investors view the tech giant, he said in an interview on CNBC’s Squawk Alley this morning.

“We’re referring to it as Apple as a service, and that’s not reflecting their service segment,” said Munster, who heads Loup Ventures. “This is a concept that the hardware is actually performing like a subscription. If in fact that is the case, I think that the multiple on Apple will go up.”

Apple last week reported quarterly earnings that exceed expectations with share earnings per share and average iPhone selling price. One day later, stock prices surged above $207 a share and Apple hit the $1 trillion company milestone.

In July, Munster said he has been telling investors FAANG stocks (Facebook, Apple, Amazon, Netflix and Google) as a whole are not a safe bet. “Specifically, companies like Netflix and Facebook are going to kind of fall off,” he said a day after Facebook’s historic market plunge.

He did, however, say “outperformance” in tech stocks will be driven by the continued growth of Apple, Google and Amazon.

Source: CNBC