Earlier this year, Apple (NASDAQ:AAPL) became the first company in history to reach a valuation of $3T, a milestone that some analysts said could be a “watershed moment” for the tech behemoth.

However, since then, Apple (AAPL) has fallen. The company’s shares have lost roughly 15% of their value, as the markets have dealt with a number of economic issues, including the possibility of a recession and the ongoing war between Ukraine and Russia. On Friday, Apple (AAPL) ended the week at $154.09 a share, and with a market cap of $2.5T.

But can Apple (AAPL) get back to that $3T market cap level? One analyst says the path for the Tim Cook-led Apple (AAPL) to regaining that enormous valuation is doable and not as difficult as investors might think.

“We believe a more pronounced shift to a subscription-like model could add roughly $1 trillion to Apple’s current market capitalization,” Morgan Stanley analyst Erik Woodring wrote in a research note.

Woodring said that when Apple (AAPL) discloses its year-end installed base, likely to occur in January 2023, that will be the “key catalyst” for the market to start moving towards this type of transformation. At the start of this year, Apple (AAPL) said it had roughly 1.8B active users.

However, if Apple (AAPL) were to make a “formal shift” to a subscription model, as mentioned above, Woodring said it “would perhaps have an even greater valuation impact.”

Woodring, who assumed coverage on Apple (AAPL) from long-time analyst Katy Huberty, noted that Apple’s (AAPL) retention rates and expanding ecosystem of hardware and services have already created one of the world’s most valuable platforms. However, the market still values Apple (AAPL) like a tech hardware company, with its shares trading at 22 times enterprise value-free cash flow, compared to 31 times for software-as-a-service companies and 44 times for subscription-driven streaming platforms.

Apple (AAPL) also trades at roughly an 18% discount to its biggest competitors in the tech space, Alphabet (GOOG) (GOOGL), Meta Platforms (META), Amazon (AMZN) and Microsoft (MSFT).

If Apple (AAPL) is able to get “sustained growth in spend per customer,” Woodring noted that investors are likely to move towards a lifetime value model for valuation.

In March, it was reported that Apple (AAPL) was working on a subscription plan for its iPhones and other hardware.

Such a move, more akin to a monthly fee, may allow Apple (AAPL) to generate more revenue from the devices. It would also be a major shift away from Apple’s (AAPL) strategy where it sells its products for full price, or in some circumstances in installments via the Apple Card or via carrier subsidies.

Woodring said that for Apple (AAPL) to turn itself into a full-fledged subscription business, it would need to hit five key metrics: go after a large, stable market; achieve high retention rates; have an opportunity to expand the existing amount of money customers spend; strong new customer acquisition; and lastly, employ subscription-based monthly or annual pricing.

Right now, Apple (AAPL) hits four of these five characteristics and Woodring said there is “increasing evidence” it will hit all five.

With Apple’s (AAPL) total addressable market worth upwards of $1.5T and the company only generating roughly $1 per day per user, the ceiling for customer spending is believed to be much higher.

In the U.S., users spend roughly $2 per day on Apple’s (AAPL) products and services, but that is still roughly half of the average cell phone bill in the U.S., Woodring noted.

For Apple (AAPL) to get there, either it has to prove to the market that the 6.2% compound annual growth rate in total spending per user is “sustainable” or it needs to have a more complete subscription model.

And it’s the latter approach that seems to be happening, Woodring noted.

Wedbush Securities recently said Apple (AAPL) is likely to meet fiscal third-quarter results when it gives its report on July 28, but investors will be looking more at demand, especially with the iPhone 14 getting ready to launch in the fall.