Mark Gurman: Here’s why Apple’s stock popped Thursday

From Gurman’s “Apple Accelerates Work on Car Project, Aiming for Fully Autonomous Vehicle” posted on Bloomberg at 12:26 p.m. Eastern:

Apple is pushing to accelerate development of its electric car and is refocusing the project around full self-driving capabilities, according to people familiar with the matter, aiming to solve a technical challenge that has bedeviled the auto industry.

For the past several years, Apple’s car team had explored two simultaneous paths: creating a model with limited self-driving capabilities focused on steering and acceleration — similar to many current cars — or a version with full self-driving ability that doesn’t require human intervention.

Under the effort’s new leader — Apple Watch software executive Kevin Lynch — engineers are now concentrating on the second option. Lynch is pushing for a car with a full self-driving system in the first version, said the people, who asked not to be identified because the deliberations are private.

Apple shares gained as much as 2.4% to $157.23 after Bloomberg reported the news.

My take: Seem likes a long-term project for such a short-term gain.

24 Comments

  1. Jacob Feenstra said:
    Yesterday it supposedly popped because of the news on right to ‘wreck it yourself’. Now it pops again on car news. The reality is likely that AAPL was ready to pop, never mind what the catalyzer ends up being. Big investors might have had a second look at the stock and liked what they saw. (Surely they want to bring the market cap back above MSFT—that’s probably what truly motived them. Just guessing ;-).

    10
    November 18, 2021
  2. Gregg Thurman said:
    Fully automated transportation isn’t a big deal, it’s a hugely big deal. Any Apple car, getting fully automated transportation correct, will leap frog all other auto manufacturers, in revenue and profits.

    The potential is worth the time and money it will take to get there.

    I continue to believe that Apple designed radios and processors are key to direct vehicle to vehicle communications that will make fully autonomous transportation possible.

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    November 18, 2021
  3. John Butt said:
    A bit suspicious that the forth paragraph of a long article is inserted to take responsibility for price changes of AAPL: “ Apple shares gained as much as 2.4% to $157.23 after Bloomberg reported the news.”

    Was the article produced to raise the price for some purpose?

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    November 18, 2021
    • Alan Birnbaum said:
      Probably to create a profit taking opportunity for the Hedgies.

      1
      November 18, 2021
    • Daniel Epstein said:
      Trying to look for cause and effect is difficult. I could get suspicious about most of the action in the last week. Insider trading based on upcoming press? My trust of Bloomberg reports on Apple is very low in general. Did Apple just start buybacks for the quarter or has it just been institutional window dressing? And Apple often has a peak in pricing this time of year? All of the above could be in play.
      I do tend to think the car project has been priced in the stock before but buy the rumor sell the news has a long runway on this one. I mean what is Apple going to be selling to keep the company afloat before 2025?
      Let’s see if this move sticks for a while. Some people are going to have to look at their price targets if this keeps up.

      4
      November 18, 2021
    • Gregg Thurman said:
      Was the article produced to raise the price for some purpose?

      No. Its sole purpose is to make Barron’s editors appear to know what they are talking about, thereby inducing casual readers to subscribe.

      Hint: they don’t.

      1
      November 18, 2021
  4. Romeo A Esparrago Jr said:
    We need Bob Goldstein to buy more Apple product.

    1
    November 18, 2021
  5. Phil Service said:
    The thing that sets Apple apart from others in the vehicle space is it’s unparalleled processor design capability. Apple brings some other things to the table — e.g. vertical integration with software/operating system — but chips are the essential differentiator.

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    November 18, 2021
    • Bart Yee said:
      @Phil Agree and so does this part of the article:

      “Recently, the company reached a key milestone in developing the car’s underlying self-driving system, people familiar with the situation said. Apple believes it has completed much of the core work on the processor it intends to eventually ship in the first generation of the car.

      The chip was designed by Apple’s silicon engineering group — which devised the processors for the iPhone, iPad and Mac — rather than within the car team itself. The work has included honing the underlying software that runs on the chip to power the self-driving capabilities.”

      “The Apple car chip is the most advanced component that Apple has developed internally and is made up primarily of neural processors that can handle the artificial intelligence needed for autonomous driving.”

      M1 Pro Max’s “roadmap” anyone? Talk about scaling to server level computing capacity in every car with at least 3 layers of redundancy.

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      November 18, 2021
      • Fred Stein said:
        Phil, Bart, Gregg – upvoted.

        Apple’s chip+OS+security+foundry partnership puts them far ahead. Arguably, uncatchable.

        The rest of the car is commodity.

        They can spend as much time and money as they need.

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        November 18, 2021
  6. Aaron Belich said:
    Or it popped because the Motley Fool, or some other stock buying service, recommended it…

    That usually explains these random surges in midday trading.

    1
    November 18, 2021
  7. Alessandro Luethi said:
    Apple is starting to listen, to open up, to give what it is asked for, to become more willing, accessible, anticipating, flexible – few but good changes for developers, MacBooks Pro the way everybody wanted them, IT services, self repair ability – what did I forget?
    At the same time we see AAPL pop higher and higher.
    These things correlate very nicely. The trend is well deserved, seems sustainable and gives us a wonderful view of the future!

    1
    November 18, 2021
  8. Bart Yee said:
    This comment from the Bloomberg article is interesting:

    “The chip’s capabilities mean it will run hot and likely require the development of a sophisticated cooling system.”

    Hmmm, wonder how Apple’s push for performance/watt processors might pay off in the future? How multiple Mx Mobility class processor redundant systems could operate an entire vehicle? How integrated Apple 5G and 6G chips facilitate safety decisions car to car and Apple server communications? Apple’s planning is 10 years out.

    1
    November 18, 2021
  9. Bart Yee said:
    Let us all hope that in 2025 the autonomous vehicle is NOT on the M5 path but rather has robust human safeguards too.

    Let’s see who and how fast can correlate this reference and it’s lesson.

    0
    November 18, 2021
  10. Alan Trerise said:
    For me the fact that Apple is accelerating efforts on the car indicates the V/AR goggles are baked. Many engineers are being freed up and Apple needs to give them something new and challenging. The remaining work on the goggles is marketing and developer materials for the developer conference roll out in June. We will start to hear a noise from the factories sometime in March.

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    November 18, 2021
  11. Bart Yee said:
    One area I take issue with in the article is the reference to the Canoo vehicle interior design. A wrap around bench seating is certainly out of the box and can facilitate passenger interactions or use of centralized “kiosk” type iPad displays. But IMO, sitting sideways to direction of travel as in a bus or limousine invites motion and vision related effects on people’s balance systems plus makes safety related systems (belts and air bags) plus crush zones harder to manage and place. The safety knowledge and experience of all forward facing seats is well known and utilized. The need for cargo storage fore and aft is another point unless a strictly people moving fleet is contemplated. In a people mover fleet, it’s not particularly normal for passengers to interact if they are not already familiar.

    Also, if personal ownership of an AAV (Apple Autonomous Vehicle) is proposed, a comfortable and personable interior with custom seats, premium materials, individual infotainment displays and safety systems is imperative and expected. If vehicles are expecting people to do group things like playing poker, mah-jong, or MagScrabble during a trip, there will be ways to do that via interconnected displays rather than on a central “table” with people situated around them. Integrated Apple Arcade, News, Music, Apple TV+, etc. is a given. Maybe there’s even room to do Fitness+ in larger van-like vehicles, even a Peloton attachment (could also add to charging and range enhancement!!). Talk about racking up the miles.

    But that’s my thinking influenced by current automotive design. Acceptance by the public will be via a mixture of old and new.

    2
    November 18, 2021
  12. Dan Scropos said:
    Not a good development:

    Report-China is ready for a full-scale invasion of Taiwan and has added missiles and amphibious boats to strengthen assault: Congress’ dire warning after US said they’d step in if Beijing attacked island.

    0
    November 18, 2021
    • Lalit Jagtap said:
      I feel the “fully automated transportation vehicle” will only be launched with satellite communication. Rest of of communication protocols, are already integrated in apple devices. But the onboard real-time satellite communication will be key to anything which will be mobile with very less human interventaion.

      0
      November 18, 2021
    • Dan, unlikely. Taiwan’s business leadership is a major factor in China’s economy. Hon Hai is one of many Taiwan-based firms driving growth & creating millions of jobs on the mainland. This leadership is considered a lingering effect of the massive brain drain during the ‘Cultural Revolution.’ Taiwan’s universities are excellent, for the most part. China will continue to threaten Taipei but it will never stage a full military invasion. The geopolitical consequences, added to the massive exodus that would occur on Formosa serves to dissuade Beijing. Angering your biggest customer, the US, is unwise. The money & people exodus from Hong Kong (to Vancouver, Singapore & other destinations) is still creating havoc for China. Various sanctions related to China’s crackdown in Hong Kong are a precursor to a greater reaction from a Taiwan takeover.

      1
      November 19, 2021
  13. Jerry Doyle said:
    Barron’s reported as the news on the Apple iCar hit the wires that Apple stock price jumped over 2%, Tesla dropped over 2%, Ford swooned below 3%, GM catapulted but clawed back to a minus 2%.

    Dan Ives also gave a pep talk where he believed it’s a matter of when, not if, Apple enters the EV competitive race. Brother Dan was almost throwing roses that if Apple truly is entering the EV race, then this adds another $30+ per share of TAM to the Apple growth story over the next few years leading up to 2025. $30 per share is a total addressable market of $500 billion more to the Apple market cap.

    Geaux  Laissez le bon temps rouler, 

    2
    November 18, 2021
  14. Rodney Avilla said:
    “Fully Autonomous Vehicles” will not be safe until they can identify and predict the behavior of ALL objects (moving or stationary) in their environment. Therefore FAVs will not be ready for today’s roads for 3 reasons: 1. Road construction and emergencies (car accidents, weather created, etc) too many different possible scenarios; 2. Road marking not consistent and visibility maintained; and most importantly 3. Human drivers are too often unpredictable

    2
    November 18, 2021
  15. Thomas Nash said:
    Actually the best news is this came from Bloomberg whose AAPL cred is very low. If it were true that Apple is believing they can get to fully autonomous in any mass market way in this decade, never mind 2025, I would get very worried about my AAPL-cart turning over.

    This is uninformed dream technology reporting by Gurman. Fully autonomous is an extremely difficult software problem no matter how powerful your chip is. It will be attained some day, but only in a series of little steps, transitioning all cars to some degree of autonomous in waves.

    The big difficult in this technology is not the fixed objects that must be navigated around, but the moving, human driven ones. As long as there are humans with any significant degree of control of vehicles (or themselves, as in crossing streets) in the same space, the fully autonomous goal is intractable.

    I am sure Apple people know this. They are not dumb. They will phase their development as they always have.

    2
    November 18, 2021
  16. John Butt said:
    This is a Bloomberg kite flier with no comeback. I still believe it is to hype the price for some reason because
    1. Apple will not develop a chip that runs hot just not credible report
    2 FSD is a very long way off. Tesla are dreaming to think they can do it while others such as Hyundai and VW are a long way ahead of Tesla. Tesla may have had a lead on automatic construction and battery tech, but that can be caught up, they are not catching the 4 year old tech/software of their competitors. I have no doubt Apple can do a lot, but not FSD.
    3 Car to car communications would be good, but legacy cars will take at least a decade to be off the road, making it only a partial solution. Expect car to nearby iPhones communication first, which will come with challenges enough
    4 The seating idea is stupid, it would only work at very low speeds, limiting the vehicle to a type of golf cart idea for suburban feeder. Maybe that’s the aim?

    I still believe the article is made up to drive the price using near-enough tech to capture imagination.

    Written from the POV of a Tesla, Hyundai and now Mini EV owner

    1
    November 18, 2021

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