Donald Trump is no stranger to controversy. So it’s odd that a comment the orange-faced billionaire made about Apple Inc. (AAPL) in a campaign speech on Monday could ultimately prove to be the most disastrous blow to his presidential hopes yet.
People like “The Donald” just as much as people hate him, but with the Iowa caucuses now less than two weeks away, Trump still holds a commanding lead (34%) over the second-place candidate in the GOP polls, Texas Senator Ted Cruz (19%).
Trump has been leading the pack more or less unimpeded since July, managing to stay atop the polls despite a constant barrage of comments that would instantly ruin any other politician. Kicking off his campaign by insinuating Mexicans were rapists, he has gone on to:
- challenge John McCain’s legacy as a war hero,
- advocate going after the families of terrorists,
- propose a ban on all Muslims immigrating to the U.S., and
- discuss the menstrual cycle of Fox News anchor Megyn Kelly.
Strangely enough, it’s Monday’s comments on AAPL that could most negatively impact his chances.
What Trump Said
The speech, at Liberty University in Virginia, had all the marks of a typical Trump event: Comment after self-aggrandizing comment, discussion of his great poll numbers and a comment or two that made everyone in the crowd raise their eyebrows.
Of a Trump presidency, the real estate mogul said,”We’re going to get Apple to build their damn computers and things in this country instead of in other countries.”
This statement alone, if Trump really believes it, could be a death knell for his campaign.
3 Reasons It Could Ruin Him
If we are to take Trump at his word and consider him a serious candidate with actual ideas — and we should, at this stage — this seemingly innocuous statement may actually prove fatal to his 2016 chances. It raises three imminent problems:
Cabinet Issues: Trump has repeatedly called on billionaire hedge fund manager and corporate raider Carl Icahn to serve as Secretary of the Treasury in a Trump presidency. Icahn, who started a $150 million Super PAC in October, owns more than $5 billion worth of AAPL stock. Bringing manufacturing back to the U.S. would severely impact Apple’s profits and cause the Apple stock price to crater, losing Icahn hundreds of millions, if not billions, in the process.
I doubt Icahn will agree to serve in a Trump presidency if The Donald truly wants to force Apple to bring its manufacturing back to the U.S. Considering that Trump has repeatedly said having Icahn on his team would allow him to make deals like no other president ever has, the strength of his cabinet becomes less impressive.
Losing Allies/Donors: If Trump’s Apple comment is to be taken at face value, he would likely lose hundreds of millions of dollars in political donations and fundraising. We already see how deeply invested Trump supporter Carl Icahn is in Apple stock, and with 60% of shares owned by institutional investors like hedge funds, pensions and mutual funds, he’s lost Wall Street’s endorsement.
A Fundamental Lack of Business Sense: Perhaps what’s most damaging about this comment is that, should he believe it, it lays bare his ignorance in the field of business — the ONE AREA where he’s supposed to be an expert.
“We’re going to get Apple to build their damn computers and things…”
Firstly, Apple isn’t a computer company anymore. It hasn’t been for years. iPhone sales accounted for 66% of revenue last year, while Mac sales accounted for less than 11% of total revenue. Does Trump not know how Apple makes money?
Given a series of bizarre, nonsensical tweets he made in December, in which The Donald revealed his poor understanding of all things business, it’s a real possibility.
On Dec. 7, Donald went on a morning tweetstorm, claiming (incorrectly) that Amazon.com (AMZN) was using The Washington Post‘s losses to avoid paying its full tax bill, and that AMZN stock “would crash and it would crumble like a paper bag,” if it ever had to pay fair taxes.
Amazon doesn’t even own The Washington Post, it’s a personal holding of Amazon CEO Jeff Bezos. Bezos responded with his fourth-ever tweet, replete with the hashtag #sendDonaldtospace.
And those three issues don’t even consider the fact that millions of Americans on Main Street own shares of Apple stock, directly or indirectly — and that their portfolios would be forced to take a hit if Apple’s earnings took a dive.
As of this writing, John Divine was long AAPL and AMZN. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.
