In the past year, Apple's (NASDAQ: AAPL) market capitalization has fallen by more than $200 billion - roughly the size of Verizon Communications or Wal-Mart Stores. Based on today’s price of Apple, the market value is around $494 billion, while Alphabet's is $457 billion, a difference of roughly $36.5 billion. This is the 2nd time this year that Apple and Google reached a similar market value. Apple reported poor earnings disappointing investors that triggered a massive sell-off of its stocks and on the opposite site is Alphabet whose earning report is decent.
The major concern for Apple currently all focus on the slush sales of its new product. Basically the new products are so disappointing that Apple have to expand the business in China last year since the demand elsewhere is not strong enough to sustain a continuing growth. However, Apple’s sales in Greater China, including mainland China, Hong Kong and Taiwan, slipped 26% in the most recent quarter, with sales in mainland China down 11%. This is due to several reasons, some of them perhaps only temporary, others perhaps longer-lasting.
Clearly, the concern of the future growth is so strong that today’s news released according to the manufacture of Apple in Taiwan is pulling the stock price under $90. Component suppliers in Taiwan will receive fewer orders from Apple in the second half of 2016 than in the same period last year, the Nikkei Asia Review reported on Thursday, citing sources. Apple typically launches its high-end phones in September.
Then the picture of Apple wanting to buyout Tesla comes to the view again?
Musk’s ambition of delivering 500,000 a year by 2018 after Tesla’s (NASDAQ: TSLA) recent earnings release. The target needs to take billions to achieve for the massive spending on building new factories for Model 3 and also related service like the charger stations. For years, Tesla is burning cash. Expanding its business costs a large sum of capital, which Tesla went into different types of ways in raising its capital. More money need to put into expanding and growing debt are cutting the ways for Tesla to reach a new point after successful launching of Model 3.
October 2012 -- Tesla raised $222 million selling shares for $28.25 apiece.
May 2013 -- the company raised $1.08 billion in equity and debt offerings, a move that allowed it to repay its $465 million Energy Department loan nine years ahead of schedule.
February 2014 -- Tesla borrowed $2.3 billion more in convertible debt to help finance the gigafactory under construction east of Reno, Nevada.
June 2015 -- Tesla obtained a credit line of as much as $750 million.
August 2015 -- Tesla sold 3.1 million shares, raising $738 million.
This might be the best solution in solving both Tesla's and Apple's problem. Since Apple has more than 200 billion dollars in cash which is sufficient to supply the development of Tesla's Model 6 and related services like factories, then Tesla could eliminate its concerns financially while assisting Apple to find its new growing point. This proposal wasn't their first time, and in my opinion, the two company can work together to eliminate concerns from the market and create a new tech giant that will be more welcomed than ever.