Apple could be the next big company to buy bitcoin, RBC speculates

Published Mon, Feb 8 20218:44 AM ESTUpdated Wed, Feb 10 20219:43 AM EST

Elon Musk's Tesla just announced it bought $1.5 billion in bitcoin , and RBC Capital Markets thinks Apple could be the next company to buy into crypto. "If the firm decides to enter into the crypto exchange business (multi-billion dollar industry) we think the firm could immediately gain market share and disrupt the industry (while simultaneously making the USA a leader in crypto for the next 10-20 years)," RBC Capital Markets analyst Mitch Steves said in a note to clients on Monday. The Wall Street firm said this is a potential revenue opportunity of over $40 billion per year for the technology giant. RBC Capital Markets assumed coverage of Apple with an outperform rating and a 12-month price target of $171 per share, which represents a 13% gain from here. Shares of Tesla are popping more than 2% in morning trading Monday after an SEC filing showed the electric auto make bought $1.5 billion worth of bitcoin . The company said in the filing it bought the bitcoin for "more flexibility to further diversify and maximize returns on our cash." In addition to the purchase, Tesla said it would start accepting payments in bitcoin in exchange for its products, "subject to applicable laws and initially on a limited basis." RBC said if Apple bought $1 billion worth of bitcoin — about four days of cash flow — for its balance sheet, it would send even more users to "Apple Exchange." "In addition, we ask, where would the price of bitcoin go if Apple purchased the asset? Likely up, in our view," Steves added. The price of bitcoin rose more than 11% above $43,000 following the news about Tesla. RBC noted that payments company Square generates about $1.6 billion per quarter in bitcoin-related revenue on an active install base that it estimates to be in the 30 million range. Considering that Apple's install base is 1.5 billion and estimating about 200 million users would transact with the digital asset, this opportunity is 6.66 times larger than Square. "Fundamentals at Apple remain secure with a cash flowing business related to iPhones, Peripherals, Computers and Services. However, the firm could unlock a multi-billion dollar opportunity with a few clicks while investing into next generation chips as well," said Steves. Apple has made no indications it would buy into crypto and it would be an unusual move for the company. Under CEO Tim Cook, Apple has been conservative with its giant cash hoard. — with reporting from CNBC's Michael Bloom.

People seen outside the Apple store at Marina Bay Sands. In a shape of a giant orb, Apple's third retail store, Apple Marina Bay Sands officially opened on September 10 this year.

Maverick Asio | LightRocket | Getty Images

Elon Musk's Tesla just announced it bought $1.5 billion in bitcoin, and RBC Capital Markets thinks Apple could be the next company to buy into crypto.