Munster values Apple Services—by itself—at $381 billion

Wall Street values the entire company at $925 billion. Go figure.

From a note to subscribers posted Tuesday by Loup Ventures’ Gene Munster:

What would Apple Services be worth if it were a standalone business? Most investors don’t feel comfortable applying a SaaS [software as a service] multiple to Apple’s services revenue given the link between active iPhone base and services growth. The fear is a competitive smartphone will emerge causing iPhone to lose market share, and resulting in a deteriorating iPhone base that becomes a drag on the Services segment. Given our thesis that iPhone has become a stable business, we feel it’s appropriate to illustrate the value of the Services business in terms of other SaaS companies. The table below summarizes what we think is an appropriate comp group. Applying the below group average (10x) multiple on Apple Services 2018 estimated revenue implies a $381B valuation. Apple’s current overall market cap is $925B.

apple services

My take: In the Apple as Gillette scenario, the iPhone is the razor and Services is the blade.

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