US, China trade war takes $75-billion bite out of Apple in a single week1 min read . Updated: 11 May 2019, 01:42 PM IST
- Apple Inc. is headed for its biggest weekly decline this year
- The shares were down as much as 9% for the week
Apple Inc. is headed for its biggest weekly decline this year as the iPhone maker’s profits are seen as particularly vulnerable to a flare-up in the trade war given its reliance on China for production and sales.
The shares were down as much as 9% for the week as of 10:45 a.m. in New York Friday, while the S&P 500 slid as much as 4% this week. A close at that level would be the worst performance since the five days ended Dec. 21, when US equities were tumbling toward the brink of a bear market. Apple has shed about $75 billion of market value since last Friday, a slide that takes it even further away from the $1 trillion valuation it appeared close to reclaiming earlier this month.
An escalation in the US-China trade war that culminated this week with the US raising tariffs on $200 billion in goods from China has been particularly troubling for Apple investors. Not only are its supply chain and production closely linked to China, the Asian nation also accounted for nearly 20% of its 2018 revenue, according to data compiled by Bloomberg. Morgan Stanley on Thursday estimated that in a worst-case trade scenario, Apple could see its earnings drop by nearly a quarter, or $3 per share.
Rosenblatt Securities analyst Jun Zhang said that because of the tariff, prices would increase for Apple’s Airpod, charging dock, the Apple Watch and other products. "We do not know yet if the retail price of the iPhone will increase in the US However, we see the tariffs impacting Apple’s MacBook component costs," Zhang wrote in a research note.
Prior to this week’s volatility, Apple shares had been strong performers in 2019. The stock is up 36% from a January low, although this has resulted in a valuation that makes it "as expensive as ever,'' according to Bernstein analyst Toni Sacconaghi.
Currently, Apple has a market cap of a little less than $900 billion, putting it behind both Microsoft Corp. and Amazon.com Inc. on the list of largest US stocks.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.