I’m mentioning this because I got an email from Motley Fool to watch a video about a “revolutionary” Apple secret project named T288. Nobody else has posted the code name T288 on the boards.
You don;t have to be a subscriber to watch the video, so I’m not giving anything away,
From what I can gather, T288 refers to an AR/VR device in development, so the claim of possibly replacing the iPhone could be true:
It does seem like a logical step for Apple to make, with a very large TAM. The interesting thing for us on this board would be to find newer, smallers companies in this area, especially if software subscriptions are involved.
I could see laptops and tablets (and phones) replaced by a pair of “eyeglasses” combined with some kind of keyboard. It could also reduce the demand for video screens.
Apple does their own CPU and their own GPU. And their own neural network accelerator. They are using Qualcomm for radio-based communications. Not sure who they use for cameras. This means I think the only thing they cannot do for an AR/VR setup is the display/glasses.
I’ve been trying to figure out who might be the winners in a few upcoming areas. Mostly 5G, ML/AI, IoT, and AR/VR. The problem is I’m having a hard time coming up with small companies that are also public.
As far as the areas you mentioned, I’m holding both Skyworks (cellphone chips) and NXP (various chips, including automotive and IoT). They’ve taken hits in the share price lately, partly related to trade war news.
Given the current $1.2T market cap, how fast do you think Apple grow with the addition of AR goggles?
Insert wild guess here: ____________
How fast are these $10B-$20B market cap SAAS companies growing?
Insert answer here: 40%-80%+ per year
If the answer to #1 is a bigger number than the answer to #2, how do you think that is possible?
Side note: AAPL has a low PE, or if you prefer, a low P/S. The SAAS companies have very high ones. That makes the real discussion more complex over a long investment period. I would guess the simple set of questions above will suffice for short periods like a year or two.
AAPL could do very well with AR if they come out with a killer market entry. But I sure don’t see any need to rush. Could be a solid foundation investment if you want something like that, but I imagine it would hold down the returns of many people here.
Rob
Rule Breaker / Market Pass / Supernova Navigator Home Fool & STMP/MTH Maintenance Coverage Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.
“AR could be HUGE!”
Why do you think AR could be huge?
How will you, your kids, parents, and grandparents be using or affected by AR 5 years from now?
“1) Given the current $1.2T market cap, how fast do you think Apple grow with the addition of AR goggles?
Insert wild guess here: _______________”
First guess: Let’s analyze revenue impact.
According to market research firm Statista the worldwide Total Addressable Market for AR/VR in 2020 is $18.8B
Accenture predicts it will be $35B by 2025.
Lets say Apple takes more than 50% of the market and grows their revenue by $20B annually at some point down the road. According to my calculations if today their sales increased by that amount that is worth about $20 per share in the stock price (today their stock price is about $260 and they have about $260B is revenue (TTM) so they are worth about $1/share for every $1B in revenue).
Second guess: Let’s analyze comparable competitor valuations.
Magic Leap is an AR startup. By July 2018 they had raised $2.35B in funding and had a post money valuation of $6.3B. In April this year they raised another $235M from NTT DoCoMo and in November announced they were raising another big funding round. Let’s just estimate their post money valuation after their next round will be at $10B.
In 2014 Amazon acquired AR startup Oculus Rift for $19B.
These are shown for perspective.
Let’s be generous and say that since Apple always find a way to maximize their value in markets we’ll give them a valuation increase of $50B.
According to my calculations that would increase their stock price by about $11 per share.
These are all rough numbers and hopefully I did the math right but feel free to double check.
Second guess: Let’s analyze comparable competitor valuations. – clydej
You’re free to make any comparison you choose of course.
My second question was intended to compare that AAPL AR growth to the likes of TTD, OKTA, etc. Not on the basis of comparable products but based on investment alternatives.
That’s all. Carry on…
Rob
Rule Breaker / Market Pass / Supernova Navigator Home Fool & STMP/MTH Maintenance Coverage Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.
