Every investor has one -- the stock that got away. In my case, it was the opportunity to buy shares of Alphabet on Aug. 19, 2004, at the IPO price of about $85 -- even though I'd never yet bought a stock. Like many people at the time, I was excited about buying shares in a company that was a household name, but unclear about the IPO process. I eventually chickened out. The stock went on to gain 5,719%, making it one of the best-performing stocks of the past two decades.
Many investors have similar regrets about not buying Apple (AAPL 0.50%) in early 2009, when the stock was trading for roughly $3 per share. Since then, Apple stock has gained 6,450%, and many investors feel they should have bought the stock before the big run-up.
Veteran Wedbush analyst Dan Ives has uncovered an intriguing parallel between Apple and Tesla (TSLA -0.40%). If he's right, it could represent a particularly compelling opportunity for investors.
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Apples to oranges? Not so fast...
At first glance, it seems unlikely that a top analyst would draw a comparison between a smartphone specialist and an electric-vehicle (EV) manufacturer. Still, after reviewing his logic, I'm inclined to agree.
In retrospect, 2008 was a turning point for Apple. That year, the company released the iPhone 3G, which at the time was among the most significant product releases in Apple's history. Sure, there were all the technological improvements to the device, but what made it so groundbreaking was the ability to download Apple-approved third-party apps from the App Store onto the iPhone 3G.
This was the first hint of the expanding ecosystem that would eventually drive a large chunk of Apple's future growth.
Tesla shifting into overdrive
When Tesla reported its second-quarter results, much of the focus was on the company's shrinking margins, the result of discounts and incentives -- even though it resulted in record revenue.
One of the most important and overlooked developments was the revelation on the conference call regarding its full self-driving (FSD) technology. CEO Elon Musk said that not only was Tesla open to licensing its FSD hardware and software to other companies, but he added: "We are already in discussions with -- early discussions with a major [original equipment manufacturer] about using the Tesla FSD. ... We're more than happy to license it to others."
This marked the first time Tesla has confirmed its willingness to license the artificial intelligence (AI) that underpins its FSD technology.
A new standard
This revelation comes quick on the heels of the groundswell of carmakers adopting Tesla's North American Charging Standard (NACS) charging port and joining its Supercharger network. Tesla isn't charging other carmakers for the privilege of using its system. Still, it does stand to benefit from government incentives for opening its network and the additional charging revenue it will gain in the coming years, which could amount to $12.9 billion or more in all.
This illustrates that the technology Tesla has developed, including its lithium-ion battery tech, Supercharger network, and FSD capability, form a robust and growing ecosystem of revenue generators.
This forms the basis for Ives's parallel:
To us, this is the "golden vision" as Tesla is now monetizing its supercharger network with batteries and AI/FSD next adding to the sum-of-the-parts story for Tesla. In a nutshell, we view Tesla where Apple was in the 2008/2009 period as [Apple] was just starting to monetize its services and golden ecosystem, with [Wall Street] not seeing the broader golden vision at the time.
The usual caveats
It's important to note that investors shouldn't make important investing decisions based on an analyst's opinion, particularly without conducting a little due diligence first. Furthermore, while Tesla's connector has essentially become the de facto charging standard, its lithium-ion batteries and FSD still have a long way to go before they are anywhere near the industry standard.
Finally, Tesla's valuation is in rarefied territory, with the stock selling for 78 times next year's earnings and nearly seven times next year's sales, so there's plenty of growth already baked into the stock price.
That said, Ives raises an intriguing parallel regarding the monetization of Apple's ecosystem, which bears some striking similarities to Tesla's opportunity today. If he's right and Wall Street is failing to see the forest for the trees, this could represent a compelling and potentially lucrative opportunity for investors.
