The most highly valued tech giant, Apple Inc. (NASDAQ:AAPL), is the first U.S. company to ever cross the $200-billion mark for cash and marketable securities. The company continues to keep this money in foreign bank vaults to avoid paying huge taxes in repatriation. For owners of AAPL stock, this is a questionable strategy given that they could probably find better return elsewhere.
I suggest these three ways that Apple can put this growing cash pile to better use.
1. Buy a Social Media Company
Some may find it to be a little too far-fetched, but this could up Apple’s game in the online media. The rise of Facebook, Inc. (NASDAQ:FB) and Instagram has left many questioning if social media will eventually become more than just a medium of connectivity. When you see a social media company delving into technological ventures like virtual reality headgear and satellite Internet connectivity in the world’s remotest regions, you don’t find the idea to be strange anymore. With ventures like the “Oculus Rift” and “Internet.org,” Facebook has transcended traditional social media boundaries to expand its scope to areas beyond its core business.
Likewise, who would have thought five years ago that Apple would eventually become an automaker? The idea of Apple potentially purchasing a social media company should, therefore, not surprise stockholders if the hardware technology company decides to expand its horizons to the fastest-growing user platform of social media.
With Facebook growing strong with its namesake platform, Instagram, and WhatsApp and Twitter gaining ground with Vine and Periscope, the next best untapped option that remains up for grabs for Apple is Snapchat. Snapchat is the fastest-growing social media at the moment, now adding monthly active users at a rate higher than Instagram. The stellar growth in video views this year is making this platform a hot favorite among advertisers. Any Snapchat acquirer could buy this platform while it’s still cheap and unlock great and easy value by monetizing it.
With Apple’s magical touch, Snapchat could even rise to take Facebook head-on. A move into social media would could also be a big catalyst for Apple stock.
2. Invest in the Future
Sounds too vague? Hold your horses! I’ve got a good proposition: futuristic drones!
Drone cameras are fast gaining interest in extreme sports, news coverage, and high-scale event photography/videography. With giants like Alphabet, Inc. (NASDAQ:GOOG) and Amazon.com, Inc. (NASDAQ:AMZN) already gearing up to invest in this niche, drones are the next big thing in the technology industry. Alphabet has recently announced its drone delivery project, Project Wing, set to go live by 2017. Prior to Alphabet, Amazon announced plans for Prime Air, expected to start deliveries by 2019. The Apple store, too, already sells third-party drone cameras on its online store.
Again, this investment may not seem to be directly overlapping with Apple’s current business model, but it’s definitely something Apple management could consider. Imagine a classic Apple-style space-grey flying device, fitted with a high-definition Apple camera and powered by the most secure iOS software platform created under a brand name that’s globally recognized. Sounds unreal? A German designer and Apple fanboy may have already sped up the process for Apple with his iDrone Dream. All Apple has to do is acquire it.
Apple’s iOS-powered devices are among the top technologies one could afford to own. The company is well-positioned to utilize its technological stronghold and its ingenious research and development team to its advantage should it decide to enter this market. Like social media, this would be a huge catalyst for Apple stock.
3. Offer a One-time Special Dividend
The simplest move, however, would be the announcement of a one-time special dividend.
Nothing would get owners of AAPL stock more excited than an attractive dividend. With more than $21.0 billion in liquid cash lying absolutely idle in its bank vaults, the company is in a good position to offer a one-time special dividend valued at anywhere between $0.50 and $1.00 per share, or $2.79 billion to $5.58 billion for the outstanding 5.58 billion AAPL stock.
Bottom Line on AAPL Stock
Corporate inversions have become a common sight in the recent days as local U.S. companies attempt to reorganize abroad to avoid taxes. Billionaire Carl Icahn’s recently announced Super PAC could help stop inversions and make it easy for big U.S. corporations like Apple to move their money back to where it belongs.
It remains to be seen how the company will end up utilizing its cash reserves; however, Apple’s history of strong dividends and stock buybacks is a reassurance of its commitment to keep returning value to owners of AAPL stock.
Bottom line, the future looks bright for Apple.
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