Apple Inc.: This News Could Send Apple Stock Soaring

Apple StockApple Stock Could Skyrocket

As Apple Inc. (NASDAQ:AAPL) squares off against the government, I get more and more bullish on AAPL stock. Whether you agree with the company’s decision or not, there’s reason to believe it could start a huge rally for Apple stock.

In case you missed it, Apple has been locked in an intense fight with the Federal Bureau of Investigation (FBI). Law enforcement officials have been trying to break into an “iPhone” belonging to one of the San Bernardino shooters.

It’s a little more difficult than it sounds. Apple has encrypted all its smartphones in such a way that they couldn’t even break it. It was a way of saying that no one, not the government nor Apple itself, would infringe on a customer’s right to privacy. (Source: “How dangerous is the tool the FBI is asking Apple to build?” The Verge, February 19, 2016.)

The FBI thinks it’s found a way in, but it would require Apple’s cooperation. When Apple resisted, the FBI sued and won. A judge ordered Apple to implement the FBI’s strategy, but CEO Tim Cook refused.

I’ll get into the details, but first let’s make one thing clear: This is a massive win for Apple. The company can now position itself as the most trustworthy smartphone maker, the only one that will keep your information out of the government’s hands.

Don’t be surprised if iPhone sales jump and Apple stock shoots through the roof.

Give an Inch, Lose a Mile

This isn’t a small battle; it’s a power struggle over how much privacy we’re willing to sacrifice for national security. We all know the National Security Agency (NSA) collects metadata about our calls, texts, and other activities. That in itself was an issue.

But forcing a company to build a “backdoor” into its software? That kind of control is unprecedented. The FBI insists that it would only be able to access the one phone it needs, but that’s not the point.

Apple would have to upgrade its firmware to create a loophole through which the FBI could tap the phone. Even if it was specific to that one phone, there’s no doubt hackers will try to reverse-engineer the firmware. If they succeed, every single iPhone would be at risk.

CEO Tim Cook showed an immense amount of courage by standing up to the FBI. He saw the endgame. Customers simply would not forgive Apple if it betrayed their right to privacy. And believe me, Americans care a lot about privacy.

A poll from Pew Research Center shows that 93% of Americans consider the privacy of information to be an important issue. It is increasingly affecting their buying decisions, particularly when it comes to consumer electronics. (Source: “Americans’ Attitudes About Privacy, Security and Surveillance,” Pew Research Center, May 20, 2015.)

A regular Joe can now walk into an Apple Store knowing the company will protect his information. That is an intangible asset and it could send Apple stock through the roof.

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