It Is Wait and Watch for Apple Stock
President-elect Donald Trump wants to bring back manufacturing jobs to the United States, and Apple, being the poster child of the U.S. technology sector, is the top-most target. Apple stock had been hit by Trump’s election victory, but it has now recouped its losses. But what Trump has just told the media may raise more speculation about AAPL stock.
In an interview with The New York Times, Donald Trump described his call with Apple Inc. CEO Tim Cook, in which he told Cook to build many plants in the United States. Trump further said that his administration would create incentives to encourage Apple Inc. to shift its base to the U.S.
“We’re going for a very large tax cut for corporations, which you’ll be happy about,” said Trump, adding that “…we have to get rid of regulations, regulations are making it impossible.” (Source: “Donald Trump’s New York Times Interview: Full Transcript,” The New York Times, November 23, 2006.)
Apple stock had been quite volatile in the past over comments by Donald Trump.
Tim Cook understands the gravity of the situation. As reported in the media, Apple had asked its two “iPhone” assemblers, Foxconn Technology Co Ltd (TPE:2354) and Pegatron Corporation (TPE:4938), to look into making iPhones in the United States. Foxconn complied, while Pegatron declined to formulate such a plan, due to cost concerns.
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However, even Foxconn is concerned about the rise in production costs. According to one source, making iPhones in the U.S. means the cost will more than double. (Source: “Asian makers grapple with Trump’s demand for US-made gadgets,” Nikkei Asian Review, November 24, 2016.)
AAPL stock investors are worried about such a possibility, which will hit Apple Inc. profits hard.
Analysts seem to be taking it in stride, however. Max Wolff, market strategist at 55 Capital, said this about the smartphone maker: “…they have the time, they have the talent, and they have the cash to kind of keep going until they figure it out.” Gene Munster, senior research analyst at Piper Jaffray Companies (NYSE:PJC), is bullish on AAPL stock and has a $155.00 price target. (Source: “The case for a big Apple turnover,” CNBC, November 23, 2016).
The attention now shifts to Tim Cook, and whether he will make that big announcement. Will the favorable regulations and tax incentives be good enough for a “Made in the USA” iPhone? Apple stock watchers will look forward to such developments in the coming days.