Could Apple be the first company with a $1 trillion market cap? This is a question that many analysts are asking right now. James Altucher, managing partner at hedge fund Formula Capital seems to think so.
As Kitguru reported a few days ago, Apple have just passed the $300 billion market cap milestone, ranking it only second to Exxon-Mobile who are valued now at $377 billion.
Altucher has estimated that Apple will sell a huge number of iPads in 2011 and has indicated that the gross margin on these is a substantial 40 percent. He added “iPad has about 30 percent gross margin on app sales and 10 percent margin on song sales, They are selling up to 30 million apps a day.”
He also said that Apple could sell as many as 200 million iPads by 2013. “Two-hundred million iPads with a 30 percent margin (currently margins on iPads are about 36 percent, but I assume they will go down) is about $30 billion in gross profits,” Altucher said. “They get 30 percent margins on an app, or about 9 cents per app, That’s $9 million in gross profits per day or about $3.5 billion per year in gross profits on app sales in 2013. Already we are at $35 billion in gross profits and that’s without counting iPhone sales, iPod sales, song sales (also about 10 cent margin per song), video sales, and of course, Mac sales.”
“Cash flow could be about 75 percent of that (like it is today), or about $60 billion,” he said. “Slap a 20 times multiple on that and you have a market cap of $1.2 trillion. That’s a share price of about $1200 by 2013.”
KitGuru says: Is it true? its all guesswork right now.