Online Reporter
A sharp selloff in shares of Apple illustrates investor scepticism about its ability to navigate President Donald Trump’s tariffs on China, Vietnam and India — countries all critical to the iPhone maker’s supply chain.
Its shares have dropped 19 percent since last week’s tariffs announcement, marking the worst three-day stretch for Apple since 2001. The rout erased more than $637 billion in market value from the tech giant and sent a proxy for the stock’s volatility skyrocketing.
“The tariff situation really complicates things for Apple. What is it going to do? Raise prices? That will hit demand. Absorb costs? That will hurt earnings and margins,” said Anthony Saglimbene, chief market strategist at Ameriprise Advisor Services. “It is very difficult to assess prospects from here, and that’s why the market has reacted the way it has.”
The risk became more acute with Monday’s threat of an additional 50 percent levy after China retaliated against previous tariffs with one of their own on US imports.
Wall Street analysts and investors alike are now trying to assess both how tariffs and a slowdown in one of Apple’s major growth markets will impact margins, spending and the stock price. The shares were up in premarket trade Tuesday following the previous day’s losses.
“The way Apple goes will influence the whole market,” Saglimbene said. “Without a deal on tariffs, it is hard to make a near-term case for Apple moving higher.”
Apple has long been viewed as a relative haven given the company’s strong free cash flow, balance sheet and robust buyback activity, all of which derive from the massive global user base for its products.
However, the current uncertainty around tariffs is overwhelming. The CBOE Apple VIX, which tracks a market estimate of future volatility for the stock, has spiked to its highest since September 2020. – Bloomberg
