Will Apple Stock Be Tarnished by a Trade War?

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Apple stock - Will Apple Stock Be Tarnished by a Trade War?

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Apple (NASDAQ:AAPL) is arguably the most successful company of the century, but its stock price has suffered in recent days due to worries about a possible trade war between the United States and China, one of the most important markets to Apple stock. Is this just a bump in the road for the company, or the beginning of a significant decline?

It hasn’t been a great week for America’s tech giants. The U.S. Supreme Court ruled that states have greater latitude to tax internet transactions, which may cut into Amazon’s (NASDAQ:AMZN) profits. Intel’s (NASDAQ:INTC) CEO resigned following revelations of a romantic relationship with an employee.

But what about Apple stock, the most valuable company on Earth? It has been aggressively seeking iPhone sales in the Chinese market, so it has more negative exposure in a trade war than many of its competitors. In fact, almost 20% of Apple’s total revenue in 2017 came from China, which has more than 130 million iPhone users (that’s more than the United States).

President Trump said June 18 that he may have to slap another $200 billion worth of tariffs on Chinese goods in the coming weeks, a move that would certainly bring retaliation from Beijing.

But the president has been known to change his mind quickly. He threatened North Korea with “fire and fury,” and then made all sorts of concessions to the communist regime. His tough talk on China could be just one more step in “the art of the deal.”

Any trade war will disrupt markets and distract from the good economic news of recent months, a fact that congressional Republicans — who are already worried about hanging on to their majorities in the midterm elections — will surely bring to Trump’s attention.

So any disagreements between the world’s two largest economies are likely to be short-lived, and not significant enough to derail one of the world’s leading companies.

Perhaps more significant are the deals Apple has been making with people like Steven Spielberg and Oprah Winfrey, an indication that the company may be planning to take on Netflix (NASDAQ:NFLX), Amazon and others in developing and streaming original content.

Bottom Line on Apple Stock

Whatever happens in the short term, Apple’s long-term strengths — its universally known brand, the strong loyalty of most of its customers, its dominant position in both hardware and software, and its growing presence in almost every world market – remain as formidable as ever.

As of this writing, Thomas Scarlett did not hold a position in any of the aforementioned securities.


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Article printed from InvestorPlace Media, https://investorplace.com/2018/06/will-apple-stock-be-tarnished-by-a-trade-war/.

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