Warren Buffett, American business magnate dubbed the “Oracle of Omaha” could not conjure up a profitable premonition for tech giant Apple if it decided to follow through on a foray into the automotive industry with a purchase of automaker Tesla, calling it a “very poor idea” in an interview with Fox Business.
Buffett is the second-largest holder of Apple stock with an equity stake worth close to $56 billion. While he dismissed the idea of Apple entering the car business, he did say Apple CEO Tim cook has his staunch support.
“I will support what Tim Cook does,” said Buffett. “But I think it will be a very poor idea to get into the auto business.”
Nonetheless, Buffett, who turned 88 yesterday, cited a fickle auto industry and stiff competition as reasons for Apple to steer clear of autos.
“It’s not an easy business,” said Buffett. “You can win in auto one year and lose the next. You’ve got a dozen big companies out there with resources. They’re going to keep coming. They’re going to copy what you do.”
Related: Warren Buffett’s Advice for Entrepreneurs
One person who hopes Apple isn’t listening to Buffett’s advice is Tesla CEO Elon Musk. After Musk’s recent reneging on the idea to go private, questions regarding the future of the company resurfaced, particularly when the company is burning through cash as production on its Model 3 sedan ramps up.
With Apple’s war chest of $244 billion in cash, there has been speculation that Apple could acquire Tesla without the slightest impact to its balance sheet. This, in conjunction with Apple’s apparent interest in self-driving vehicle technology, fueled the rumors of a possible Tesla purchase.
However, according to Rex Crum of The Mercury News, “any Tesla sale to Apple would probably be long shot. Tesla’s current market capitalization gives it a value on Wall Street of almost $52 billion, and Apple doesn’t have a history of doing multi-billion dollar acquisitions. The most Apple has ever paid for any company was $3 billion, when it bought Beats Electronics in 2014.”
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