Investors should consider Apple (NASAQ: AAPL) as the bellwether on profit pressures corporate firms face from the U.S. and China trade war. Apple stock is predictably sensitive to these moves. Source: dennizn / Shutterstock.com
Full Answer
How is the trade war affecting Apple stock?
The trade war is affecting a lot of different stocks, but Apple seems to be hit harder than most. The Dow Jones Industrial index dropped 2.6%, and the Nasdaq Composite dropped 3.5%.
Why did Apple’s stock fall on August 23?
On August 23, Apple (AAPL) stock fell 4.6% as the US-China trade war intensified. The day’s economic news was dominated by China’s warning of implementing tariffs on more US goods.
Will Apple be affected by the 25% tariffs?
Additionally, Apple faces a possibility of 25% tariffs on products shipped to the US from China, where its main contractors, including Foxconn, are based. The US is a major market for Apple, and thus, any tariff may prove costly. As a result, Apple may be tempted to move its production facilities out of China to avoid tariffs.
Why does Apple make so much money in China?
The other reason is that Apple, unlike other big tech companies, makes a substantial amount of its money by selling its products to Chinese consumers. Apple reported $51 billion in revenue in 2018 from “Greater China,” which includes Hong Kong and Taiwan. That’s Apple’s third-biggest region, after the Americas and Europe.
Does the trade war affect Apple?
The Apple Watch was subject to the latest round of tariffs in the trade war, which were cut to 7.5 percent from 15 percent in a trade deal signed this year.
What happened to Apple stock in 2019?
Its stock finished 2019 at $293.65 a share on Tuesday, making for a 89% annual gain and triple the 29% rise for the benchmark S&P 500 Index. For the entire decade, Apple's stock rose nearly tenfold. In other words, someone who invested $10,000 in the company on Jan.
What stocks are most affected by trade war?
Tech. Chip makers and electronics manufacturers that depend on China for sales, like NVIDIA Corp. (NVDA), Micron Technology (MU) and Intel Corp. (INTC), are seen as especially vulnerable in a trade war scenario.
Why is Apple stock growing so fast?
The services business is growing faster than hardware and is a primary reason Apple reached multiple trillion-dollar valuations during the pandemic and profits from services combined with buybacks can get the stock to 10% earnings growth, according to Wall Street analysis.
Why is AAPL stock so high?
The strong print was driven by sales of the iPhone as well as surprisingly good results from the company's services business. Revenue for the quarter ended Dec. 25, rose to $123.9 billion, up 11% from a year ago and ahead of analysts' estimates of $119 billion.
What is the purpose of splitting stock?
Companies typically engage in a stock split so that investors can more easily buy and sell shares, otherwise known as increasing the company's liquidity. Stock splits divide a company's shares into more shares, which in turn lowers a share's price and increases the number of shares available.
How does the trade war affect the stock market?
In this period, when the US imposed tariffs on US$50 billion worth of Chinese products, the stock market responded significantly to the trade war, and the whole stock market declined significantly. On 4 April 2018, the US issued a tariff list for 1300 products, involving 25% tariffs on products worth US$50 billion.
Who benefits most from a US-China trade war?
In Asia, the undisputed winner is Vietnam, whose exports to the United States rose by 35 percent, or $17.5 billion. Another standout, Taiwan, used its long-standing comparative advantage in hardware components to benefit from trade diversion.
Who is China's largest trading partner?
China's Top Trading PartnersUnited States: US$521 billion (17.2% of China's total exports)Hong Kong: $313.1 billion (10.3%)Japan: $151.3 billion (5%)South Korea: $135.1 billion (4.5%)Vietnam: $125.8 billion (4.2%)Germany: $103 billion (3.4%)Netherlands: $91.6 billion (3%)India: $87.9 billion (2.9%)More items...•
Why is it good to buy stock in Apple?
Over the last three years, Apple's free cash flow per share is up 77%. Further 5G upgrades, new product demand, and continued growth in the higher-margin services segment should drive even stronger free cash flow over the next several years, sending the stock higher.
Why Apple is a good long term investment?
Summary. Few companies exemplify how long-term investing can help you retire rich as Apple, which is up, 2,127X over the last 35 years. The good news is that Apple is still one of the best companies on earth, and is expected to grow 14.5% over time, meaning it can make you rich over time.
What factors affect Apple stock?
Apple's margins are also likely to trend higher on a year-over-year basis, driven by a growing mix of services revenues, higher average prices on iPhones, and possibly by a favorable forex environment.
What would happen if Apple had a trade war with China?
Martin: A US-China trade war would hurt Apple’s sales all over the world. Worldwide Exchange. Morgan Stanley analyst Katy Huberty estimates that a 25% tariff on the iPhone could lead to a price increase of $160 for the iPhone XS.
Why did Apple close down?
Apple closed down nearly 6% on Monday after news of a major escalation in the U.S.-China trade war. China said on Monday that it decided to raise tariffs on some U.S. goods after President Donald Trump threatened to further raise tariffs on Chinese imports last week.
Where is Apple assembled?
The company assembles iPhones in China, making it vulnerable to price increases if a tariff were to be placed on Chinese exports. It also sells a lot of iPhones in China, making it sensitive to Chinese consumer confidence. CEO of Apple Tim Cook attends China Development Forum 2019 at the Diaoyutai State Guesthouse on March 23, 2019 in Beijing, ...
How much money did Apple make in 2018?
Apple reported $51 billion in revenue in 2018 from “Greater China,” which includes Hong Kong and Taiwan. That’s Apple’s third-biggest region, after the Americas and Europe. Apple’s total revenue for the year was $265.6 billion.
Does China tariff affect Apple Watch?
Last fall, a draft list of one of Trump’s round of China tariffs would have affected the Apple Watch and Apple AirPods, for example, although the final list did not affect Apple’s products. The other reason is that Apple, unlike other big tech companies, makes a substantial amount of its money by selling its products to Chinese consumers.
Will Apple eat the tax?
Or Apple could eat the tax, which could lead to a 23% decrease in earnings per share in 2020. “Apple has one of the most significant exposures to Chinese exports to the US in our IT Hardware coverage group, given final assembly for many of its consumer electronic devices is located in China,” Huberty wrote in a note last week.
Is Apple in a trade war with China?
Apple is especially vulnerable to a trade war with China for two primary reasons. First, it assembles its iPhones primarily in China. Although it has a lot of American suppliers — it spent $60 billion on American suppliers in 2018 — iPhone assembly is done in mainland China.
How much did Apple stock fall on August 1?
Apple stock fell 2.2% on August 1, when the 10% tariff was announced. It dropped 5.2% on August 5 when China retaliated to the 10% tariff by devaluing the yuan.
What happened to Apple stock on August 23?
The day’s economic news was dominated by China’s warning of implementing tariffs on more US goods. CNBC reported that China would impose tariffs in the range of 5% to 10% on $75 billion of US imports. These tariffs would be levied in two stages effective September 1 and December 15.
Apple could get an unexpected shot in the arm thanks to the U.S.-China trade war
Harsh has been covering technology, and sometimes retail, since 2011. He is focused on finding great businesses for the long run. You can follow him on twitter @techjunk13
India stands tall amid the global smartphone decline
The global smartphone market fell 6.6% during the first quarter of 2019, according to IDC. Apple was the biggest casualty of this drop: Its shipments plunged a whopping 30% year over year to 36.4 million units. This crash pushed Apple to the third position in global smartphone rankings, behind Samsung and Huawei.
India could answer some of Apple's problems
Thus the U.S.-China trade war could be a blessing in disguise for Apple if it elects to move a sizable chunk of its production to India. The company has struggled in this market because of a flawed policy of manufacturing older model phones and selling them at reduced prices.
Why did Apple stock fall?
Apple stock fell nearly 16% in May due to worries of Apple being the victim of the trade war. The stock has recovered by over 10% since.
Why would Apple move its plants to other countries?
The company could also shift its plants to other countries, including the US to avoid tariffs if trade tensions escalate. However, shifting the geographic location of Apple’s facilities could cost the company a huge amount.
Is Apple going to have tariffs on China?
Additionally, Apple faces a possibility of 25% tariffs on products shipped to the US from China, where its main contractors, including Foxconn, are based. The US is a major market for Apple, and thus, any tariff may prove costly.
Is Apple moving to China?
As a result, Apple may be tempted to move its production facilities out of China to avoid tariffs. The company’s biggest contractor, Foxconn, has already confirmed that it will start mass-production of high-end iPhones in India, which could also help in reducing the cost of iPhones in India, a market it has struggled in. The company could also shift its plants to other countries, including the US to avoid tariffs if trade tensions escalate.
Did the US double tariffs on China?
The US doubled tariffs on the $200 billion worth of Chinese goods it had previously levied a tariff on. A trade deal now looks unlikely. The US also put a trade blacklist on Chinese telecom equipment maker and smartphone giant, Huawei. Thus, although Apple CEO Tim Cook thinks that China is unlikely to target Apple to retaliate, ...
What happened
Shares of Apple (NASDAQ: AAPL) gained 86.2% in 2019, according to data from S&P Global Market Intelligence . The tech stock's share price tracked relatively closely with momentum for the broader market for much of the year and then dramatically outperformed from September through December thanks to strong performance for its wearables products.
So what
Market tracking from Gartner found that iPhone unit sales fell nearly 11% year over year in the third quarter of the calendar year, and revenue for the popular mobile hardware was down 9% in the quarter.
Now what
Apple stock has continued to gain ground in 2019, with shares up 5.7% in the year's trading so far.