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Ives said that Apple needed an acquisition because it was "several miles from the competition". And he certainly has the money to spend – he now has $ 245 billion in cash, according to his report on the results of the first quarter of 2019.
"If they want to be a serious player here, they're going to have to invest heavily in the platform in terms of creating their own original content," Wedbush Securities chief executive said on The Exchange.
As to which acquisition would make the most sense, Ives cited names such as A24 Studio, Lionsgate, Viacom / CBS, Sony Pictures, MGM Studios and Netflix, as well as a potential video game publisher as a subscription service .
If Apple runs with "minimal downtime" and aggressively acquires content, Mr. Ives thinks the California Cupertino company can reach 100 million subscribers in three to five years. That could translate into annual revenues of $ 7 billion to $ 10 billion, he wrote in a note to customers earlier in the day.
If he does not take advantage of the "mature" mergers and acquisitions landscape, "it will be a major strategic mistake in our view that will haunt the company for years to come," wrote Ives, who has an outperformance rating and a target price of $ 200 the stock.
Apple has had its share of ups and downs lately. The tech giant reached a market capitalization of $ 1 trillion on Aug. 2, but the stock has since dropped about 15%. In January, Apple slashed its revenue forecast, accusing weak iPhone sales in China. It has also been named as the most innovative company in the world in Fast Company's annual ranking.
Apple's shares closed slightly lower on Thursday.
"It's a defining moment for Cook and his company – it's a dark chapter that they're trying to get around," Ives said.
Apple did not immediately respond to a request for comment.
Disclosures: Wedbush Securities is a market maker at Apple.
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