| | | Lower than expected guidance might be one reason for underperforming the market, but not the only reason. For example, one of the presidential candidates promises at least a 20% tariff on imports, which would have a major impact on iPhones made in China and shipped to U.S. customers. Another broader reason has to do with the overall economic impacts of such a tariff, combined with income tax cuts that could impair future viability of social security, medicare, and even a host of agriculture subsidies provided under the current tax system.
A proxy that might explain how a large number of conservatives view the election outcome might be the fluctuations in the price of a social media company with the ticker symbol DJT. When prospects look good for the conservative candidate, the price of DJT goes up. When prospects, at least in the eyes of those who bought DJT shares, look not so good, the stock goes down, and with it, stocks like AAPL, which already benefits from an exception to an earlier tariff on imported goods. DJT shares were issued last April at a price near $15 and immediately began moving upward to about $60. Then they declined to a level below the original issue price. Three days ago DJT traded briefly near $56, but today it has dropped to about $31, indicating greater uncertainty over the outcome next Tuesday. The principal owner of DJT shares owns about 60% of them. The company has operated at a loss since it was first created.
And finally, there may be some fundamental measures that could explain weakness in AAPL shares. The forward looking price-earnings ratio is near 30, which, compared to single digit net income growth predicted for the next quarter, seems quite high, and much higher than similar data for similar firms. Note as well that the latest job growth data for the U.S. suggest a slowing down of economic growth, and perhaps a reluctance to shell out some $1000 or more for a new iPhone that won't support artificial intelligence until later this year or next. JMHO
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