Over the past few weeks the rumor mill has been churning, even spouting ‘news’ of a potential sale of Disney (NYSE: DIS) to Apple (NASDAQ: AAPL). Through pure and utter speculation, we can amuse ourselves during these trying times by looking at several other companies that could give more bang for Apple’s buck. With a reported $207 billion in cash reserves, can these three stocks give the tech giant a new edge?
Although Apple is dominating the music streaming market in the U.S., Canada, and Japan, Spotify (NYSE: SPOT) has 124 million paying subscribers in comparison to Apple Music’s 60 million. An acquisition of Spotify would give Apple total control of the audio streaming market, whilst causing antitrust regulators to go into lockdown. Spotify has the added advantages of being both the music app of choice for non-Apple device users as well as currently being the largest platform for podcasts.
Not only would this confirm Apple’s ultimate authority in the music and audio industry, but it would fend off Big Tech competition. Rivals Amazon (NASDAQ: AMZN) and Microsoft (NASDAQ: MSFT) could renew attempts to carve out a portion of the market share; for example, Microsoft was rumored to be interested in purchasing Spotify in 2018.
With a market cap of $23.10 billion at the time of writing, Spotify is easily affordable for Apple. If only we could conveniently forget that antitrust regulations would stop such a deal or the fact that the two companies have quite a strained relationship anyway. Spotify has been quite outspoken in its criticism of Apple’s charges in the App Store and probably wouldn’t want to be acquired by its main rival. One can dream though right?
E-commerce is a booming market, with the likes of Amazon fending off upstarts such as MercadoLibre (NASDAQ: MELI) and Alibaba (NYSE: BABA) to consolidate its strives for galactic supremacy. An acquisition of Shopify (NYSE: SHOP) could give Apple a foothold into the $3.5 trillion e-commerce market.
Shopify’s current market cap is $40.4 billion, but it has a lot more room to grow. As a company, it gives the average entrepreneur a helpful model for developing their own e-commerce business and its strengths lie in developing the potential of smaller companies. An acquisition such as this would allow Apple to expand into another platform to sell its products, as well as endear it to small and mid-sized businesses.
Apple already creates the tech and hardware that enables Shopify’s online transactions, while the new Apple Card shows that it has been moving into the payment sector. Acquiring Shopify would be an almost seamless integration to its own set of services.
One reason Apple might not be interested in this purchase is that it already has an established e-commerce system through its App Store and Services sales. Shopify would be an acquisition that could worry Amazon. As rivals in the Big Tech club, Apple could pose a serious threat with its cash reserves and its technology development.
Roku (NASDAQ: ROKU) is a nifty service that already allows the user to stream the likes of Apple TV+ and Disney+. Roku would supplement Apple TV with options that non-Apple product users would be drawn to. It is notable that in the last quarter of 2019, 6 out of the top 10 new original shows on streaming services were produced by Apple.
Apple TV has an estimated 33.6 million users in the U.S. alone, but notably, the majority of them aren’t paying for a subscription. With a 37% market share, Roku is one of the most-used TV platforms in the world. This would be a lot of data for Apple to use in order to widen not only its viewership but also enhance the experience for its existing product users. As Apple has done with its other services, it could offer a 1-year free subscription with every Roku signup.
Roku’s current market cap is hovering around $10 billion, which would be an easy, cheap and smart purchase for Apple. It would allow the iPhone maker to access previously unknown consumer data and expand its viewership, it would be a sure-fire way for Apple to facilitate its dream of revolutionizing the TV industry.
Maintaining the pure speculation, in many ways Apple could certainly afford each and all of these options. If there was a choice, my money would be on Shopify and Roku to expand in sectors Apple is only just beginning to explore.
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in companies mentioned above. Read our full disclosure policy here.
Contributing Writer at MyWallSt
Poppy likes companies that go the extra mile. Her favorite stock is Amazon because she is fond of its innovation, variety, and creative solutions to sustainability.