Monday was a difficult day for the markets, with big tech losing $162 billion collectively in market cap over the course of the trading session. Leading the loss was Apple (NASDAQ: AAPL), whose shares fell by 5 percent over the course of the day in response mainly to tariff issues between the U.S. and China.
The first move valuable U.S. companies, including Apple, Microsoft, Amazon, Alphabet and Facebook, all lost value on Monday as part of a broader market fall sparked by concerns of a trade war with China.
President Trump announced that as of September 1st, Washington would be adding a 10 percent tax on around $300 billion worth of Chinese imports as trade deal talks continue to decline. While these worries aren’t a new thing for investors who’ve had to deal with this for a while, markets still are as vulnerable as ever to these sorts of developments.
However, while Apple ended up being the biggest loser amidst these fears, few experts are worried about the company over the long term. Analysts at JP Morgan went on to say that they predict the tech giant will simply absorb any tariff impacts without having to raise the retail price on their iPhones. Many have gone on to say that with today’s dip in price, now is an excellent buying opportunity for more value-oriented investors.
“Expect Apple to absorb tariff impact and prioritize market share, implies -8% EPS headwind. We estimate a price increase of around 6% is required to absorb the impact of a 10% tariff and maintain gross margin dollars, although still implying a modest ~180 bps to Product gross margins,” said J.P. Morgan analysts according to CNBC. “However, we believe Apple is more likely to absorb all the tariff impact and not raise prices on iPhone shipments (roughly 35% of total) and other hardware devices into the US, which we estimate will lead to a ~300 bps headwind to iPhone margins.”
Shares of Apple ended the day down 5.2 percent in what was one of the biggest single-day losses for the tech giant in a while, shedding $10.7 of its stock price on Monday. Over the past few months, shares have been edging upwards but took a big hit in late May/early June before regaining most of that value back.
There does seem to be some level of resistance around the $230 price range, as the companies 52-week high and all times record of $233.47 has yet to be broken.
Apple Company Profile
Apple designs a wide variety of consumer electronic devices, including smartphones (iPhone), tablets (iPad), PCs (Mac), smartwatches (Watch), and TV boxes (Apple TV), among others. The iPhone makes up the majority of Apple’s total revenue. In addition, Apple offers its customers a variety of services such as Apple Music, iCloud, AppleCare and Apple Pay, among others.
Apple’s products run internally developed software and semiconductors, and the firm is well known for its integration of hardware, software and services. Apple’s products are distributed online as well as through company-owned stores and third-party retailers. The company generates about 40% of its revenue from the Americas, with the remainder earned internationally. – Warrior Trading News