Recently, Steve Wozniak, Apple co-founder told CNBC that he believes Apple (AAPL) stock has the potential to hit $1,000 because the company has a "tremendous amount of growth ahead." I do not disagree that the company has tremendous growth ahead. However, I believe that government restrictions will prevent AAPL from hitting $1,000.
AAPL is not currently a monopoly. Right now, AAPL is projected to occupy about 8.6% of the global handset market and 23.7% of the smartphone market. AAPL also recently announced its tablet market share slumped from 64% to 57% as Amazon's (AMZN) Kindle Fire has gained market share. For AAPL to hit $1,000, AAPL's market share in both the tablet and mobile phone market would likely need to increase significantly. The increase in market share would lead to much greater antitrust scrutiny because AAPL would have substantial power in many consumer-centric industries.
For AAPL to trade at $1,000, that would mean the company would be worth more that $1 trillion. In addition to dominating the mobile phone business, laptop business, and tablet business AAPL will likely need to dominate the TV business. Wozniak told CNBC:
Apple is on such a winning course because it's encapsulated all of its different big products that I mentioned, they all work together so well that you are in a course that if you buy a product from another company it doesn't really do as much as one from Apple does.
Apple has that much growth left because we're talking something like Apple TV that works with all these other great, great companies and products all in the same sphere.
It is highly unlikely that the U.S. Justice Department would allow AAPL to become powerful enough to be worth in excess of 1 trillion dollars. The Justice Department recently put a halt to AT&T's (T) planned buyout of T-mobile. Deputy Attorney General Cole commented:
This result is a victory for the millions of Americans who use mobile wireless telecommunications services. A significant competitor remains in the marketplace and consumers will benefit from a quick resolution of this matter without the unnecessary expense of taxpayer money and government resources.
The key point here is that the government is interested in "maintaining competition" within a business. The combination of AT&T & T-mobile would have resulted in a company with just over 43% market share in the wireless phone business. For AAPL to become so dominant as to be worth 1 trillion dollars, almost all competitors in all industries will be killed by AAPL. Also, AAPL would almost certainly need to have greater than 43% market share in a variety of businesses to attain a $1 trillion valuation. If the AAPL revolution would continue to build in industries such as TV, I believe the Justice Department would push for a breakup of AAPL before it neared $1,000 per share.
U.S. Government Anti-trust History
The U.S. Government has had a long history of breaking up companies it deems too powerful. Arguably the most significant break-up in the history of the world was the 1911 Supreme Court ruling that Standard Oil must be broken up. In more recent history, the U.S. Government also forced the break-up of the former AT&T .
European Anti-trust History
Recently, the EU commission decided to block the proposed merger between NYSE Euronext (NYX) and Deutsche Boerse because the deal would have led to a "near monopoly." The EU commission also famously battled Microsoft in anti-trust litigation in the early 2000's. Currently, the EU commission is reviewing an anti-trust case against Google (GOOG).
History has shown that once a company become too powerful, governments are willing to step in and force major changes at the company. AAPL will likely face increased government scrutiny as it grows bigger and bigger. Ultimately, AAPL would be broken up if were to become to successful.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.