Mitch Steves, a research analyst at global investment bank RBC Capital Markets, thinks Apple should get into the crypto exchange business.
In a new CNBC interview, Steves says that based on other participants in the marketplace, Apple could potentially spend about $500 million on research and development of a crypto exchange to generate tens of billions of dollars in equity value.
“I really do believe this is a pretty clear opportunity in my opinion, because if you look at Square’s R&D (research and development) budget, they spend about $670 million per year. Apple generates cash flow of that amount in less than 2 and a half days. So the amount of R&D expense it would take to create a crypto exchange for them – just to be clear, they don’t even need to own any crypto assets – they could just create an exchange.
And if you run that math, Coinbase right now is going public through a direct listing and they’re valued at $50-80 billion with only 35 million people as their install base. Apple has a 1.5 billion [person] install base, and they sell 200 million phones per year, so what prevents Apple from utilizing its best asset – which is software, a closed ecosystem – and basically putting people onto a crypto wallet and then making money off the fees?”
Steves adds that he doesn’t think cryptocurrency is going away any time soon, and that developing an exchange would be a low-risk way for Apple to get in on the action without exposing themselves to the volatility of any one particular asset.
“If I was working at Apple as a strategy officer, this is legitimately something I would do. Because if you can invest $500 million to potentially create $50 to $80 billion in equity value, that’s a lot more compelling to me than trying to compete against an Elon Musk and Tesla, a distributed energy company where you’re going to spend $15 to $20 billion just for a maybe.”
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