3 Ways Apple And Tesla Are Actually Alike
Tesla Motors Inc (NASDAQ: TSLA) is often compared to Apple Inc. (NASDAQ: AAPL), but do the two firms really have anything in common? Cathie Wood, founder and CIO of ARK Investment Management, recently shared a few ways in which the two companies are actually alike.
Their Stocks Were Undervalued
Wood is a big fan of Tesla. She disagrees with the critics who say the firm is not a real company, but ARK uses "disappointing" quarters to build its position in the firm. Similarly, there was a time when Apple was an under-appreciated stock that some investors didn't believe in.
"In the early days…Apple couldn't do anything right because they decided to stick with a closed ecosystem," Wood told Benzinga. "We thought, what a failure that was in the PC world in the '80s and '90s and even the early part of the last decade. Most people thought it was going to be a failure on the wireless side."
As it turns out, consumers didn't mind having a closed system "that they didn't have to worry about," said Wood. But in the early days of wireless, "There was a big, big controversy on that."
Wood said that, in addition to salesforce.com, inc. (NYSE: CRM) and Red Hat Inc (NYSE: RHT) -- other disruptive companies that were initially misunderstood -- Apple's path can be compared to Tesla. "I think the analogy is more to Apple than a lot of people believe," she said.
Wood said that Apple is "fanatical about design, as is Tesla."
Is The Model S A Mobile Device?
Wood noted that Apple is focusing its development on mobile devices. "And Tesla is the ultimate mobile device," she said, adding that Tesla is selling into a market that's more than five times the size of the smartphone space.
"Apple has 12 to 15 percent of the wireless market out there in terms of units, but it has the bulk of the economics," Wood added. "It has more than half of the revenue because it's where most of the economic value resides in the wireless space. In the high-end luxury space, Tesla has a 20 percent share."
Wood feels that some investors do not appreciate the share that Tesla has captured. "This is a global market that's $2.5 trillion in size," she said of the auto space.
"That compares to a wireless market that's a little less than $400 billion in size. [Tesla's] strategy is the same as Apple. I could see it getting to an Apple-like market capitalization. From $25 billion today, that's really saying something. It doesn't even have to go to an Apple [level], $700 billion, to be an incredible stock here."
Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.
Image credit: Steve Jurvetson, Wikimedia
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