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Why the US-China Trade War May Not Affect Apple Much

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Apple stock falls 1.3% as investors worry about the impact of a trade war

Apple (AAPL) stock fell 1.3% on July 11 as a result of the escalating US-China trade war, while the tech-heavy NASDAQ Composite fell 0.6%. The Trump administration announced on July 10 that it would assess 10% tariffs on an additional $200 billion in Chinese goods.

Apple’s stock performance has been choppy over the last couple of months due to the trade tensions. Investors are worried as over one-fifth of the tech giant’s revenue comes from Greater China.

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The trade war may not impact Apple

However, the trade war may not affect Apple much, as the Chinese government may not want to upset the relationship it has with the company. China is also home to iPhone assembling company Foxconn, whose fortunes are tied heavily with Apple’s. Apple stock is trading at a decent valuation of 14.3x the company’s estimated 2019 earnings.

Apple is also working hard on cutting its dependence on iPhones. Its service segment, which includes fast-growing businesses such as the App Store, Apple Music, and iTunes, is widely expected to bring Apple’s next bout of growth. Therefore, the decline on Wednesday may signal a good buying opportunity.

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